Crop Prices Surge by Over 13% Amid Wars and Extreme Weather

Crop prices are surging due to wars and extreme weather, pushing them up by over 13% in August. This marks their biggest monthly gain since July 2012, according to the Bloomberg Agriculture Spot Index.

The index tracks 10 major products, including wheat, which has reached a three-year high. The Black Sea port attacks have slashed shipments from a major growing region, driving up prices. Sugar and cocoa are also up about 20% due to concerns over weather worries fueled by a strengthening El Niño.

Wheat exports from Ukraine and Russia have slowed down as both sides strike each other's ships and ports. Russia is preparing to escalate attacks after concluding that negotiations for a peace deal have reached a dead end, according to Bloomberg. The two nations account for over a quarter of the world's wheat exports, leaving few obvious options to fill the gap.

Lachstock Consulting noted that 'Argentine quality is questionable, Canada has limits, Australia has export capacity constraints and US wheat is increasingly the expensive residual supplier.' Unless Black Sea exports begin flowing again, the market looks to be dealing with a multi-season supply issue rather than a short-term logistics problem.