The grain market in 2021 proved to be very volatile, prices changed quickly.
Experts say 2022 could be the same.
There are at least three factors that can greatly affect what prices for wheat, corn, soybeans and other crops will be this year.
Weather
Last season, extreme weather conditions were observed in many regions of the world: drought, frosts, prolonged rains. All this greatly affected the yield.
There are also big questions about the coming year. The prices on the grain market largely depend on what kind of crop can be harvested in the main exporting countries.
The weather is always unpredictable for farmers, and in recent years, due to climate change, the frequency and severity of extreme weather events has increased. Therefore, this factor will certainly add volatility.
Inflation
From the very beginning of the pandemic, all countries have been struggling with its consequences, including by injecting additional money into the economy.
Falling key rates, additional emission — all this triggered an increase in inflation. For example, in Russia it amounted to more than 8% per year, in the USA — more than 6%.
Currently, the Central Bank of the Russian Federation has already raised the key rate several times, the Fed is preparing to do the same.
Regulatory measures are reversed, but all this will again stimulate volatility in the market.
Among other things, in recent months, prices for fuel, electricity and fertilizers, for example, have risen sharply. This can hit agrarians hard and will almost certainly cause a further increase in prices for their products.
Inflation is unlikely to be quickly defeated, so it will continue to drive up prices.
Supply chain disruptions
The pandemic caused numerous problems with the timely delivery of a variety of goods, as many countries even closed their borders.
In addition, a number of states made food stocks, which led to a shortage in the market.
As a result of all this, the rates of carriers have increased dramatically. For example, the prices for chartering ships have increased by up to 40%.
In addition, many exporting countries, including Russia, have restricted food exports to protect the domestic market. This has also contributed to rising prices. For example, corn and wheat increased in price by 20% in 2021.
The problem is likely to continue into 2022. It is already known that the Russian Federation has set a quota for wheat: 8 million tons from February 15 to June 30.
In general, according to experts, although the main impact of the pandemic is already over, the grain market will still feel its consequences for some time, including due to inflation and disruptions in supply chains. Well, the weather can add uncertainty.
