“Three years ago, calamity loomed. Russia’s war in Ukraine pitted two big grain exporters against each other. Breadbaskets elsewhere faced brutal droughts. Wheat prices hit records; maize and soyabeans also surged. Then, within weeks, they fell, and have carried on sliding since. They are now close to five-year lows.

It is not obvious what prompted traders to go from panicked to placid. As the war in Ukraine continues to rage, the country’s farmers are hurting. Its wheat exports, once the world’s fifth largest, are set to shrink by 25-30% this season. Elsewhere, climate change is damaging output and American tariffs are disrupting trade. Indicators that usually worry investors, such as wheat stocks, have been flashing red for years. Why, then, are markets so calm?

Part of the answer is that global production has been strong. Owing to benign weather, Russia, the world’s largest wheat exporter, has enjoyed a run of excellent crops. Australia, the second largest, has also posted two whopping recent harvests. Even Europe has outperformed.

There are similar bounties elsewhere. America is due to produce record volumes of maize this season. Brazil, with which it competes to be the top maize exporter, may also hit new highs. That is pushing down the price of other crops used as animal feed, including wheat and soyabeans.”

From The Economist.