"La Ni?a Impact Continues... Energy and Agricultural Product Prices Rise"

[Asia Economy Reporter Park Hyungsoo] Amid continued rises in raw material prices this year, grain prices are expected to continue increasing for the time being.

According to Daishin Securities on the 17th, the CRB Raw Materials Index and the S&P GSCI Raw Materials Index have risen by 4.44% and 5.12%, respectively, as of the 15th of this year.

Kim Sohyun, a researcher at Daishin Securities, explained, "Weather can be cited as a factor for the rise in energy and agricultural product prices," adding, "Due to the continuation of La Nina, cold winters have appeared in Europe and Asia, increasing demand for heating."

She continued, "The increased demand for heating has led to higher demand for coal and natural gas used as fuel for power generation," and added, "Recently, natural gas inventories in the United States have also been decreasing."

Researcher Kim also analyzed, "In Latin America, including Argentina, dry weather has caused disruptions in grain production," and "If La Nina continues as predicted by the U.S. National Oceanic and Atmospheric Administration, there is a high possibility of further price increases for major grains."

She emphasized, "In Latin America, the Grain Condition Excellent (GTE) ratio has decreased due to worsening soil moisture," noting, "As of the 13th, Argentina, the world's third-largest exporter of corn and soybeans, had GTE ratios of 19% and 18%, respectively, which are low."

Furthermore, "Major institutions have revised downward the supply forecasts for corn, soybeans, and wheat this year, considering the impact of La Nina," and reported, "In the USDA January report, the 2021 global production forecasts for corn, soybeans, and wheat decreased by 0.8%, 0.3%, and 0.1%, respectively, compared to the previous month."

Researcher Kim introduced, "La Nina occurred from 2010 to 2012," and explained, "Due to severe droughts in the United States, U.S. corn production decreased by 13.4% over two years in 2012, and soybean production dropped by 8.9%."