The increase in the international prices of corn and soybeans, inputs used to produce animal feed, threatens to put upward pressure on the production costs of meat, eggs and dairy products.
In recent months, the international price of a bushel (27 kilos) of soybeans increased by 28%, from $10.6 to $13.62, between November 1, 2020 and January 28, 2021.
Due to the high geographic concentration of global production, Central America has increased its imports, but at the same time has become more vulnerable to crop losses, rising international prices and possible disruptions in supply chains.
The importance of the market for this type of food is that rice, wheat, corn, beans and soybeans are basic foods on which the world's population largely depends, since it is estimated that almost half of the calories consumed by people come from these foods.
In the first quarter of 2018, imports of solid soybean waste in the Central American countries amounted to $131 million, 26% more than in the same period in 2017.
Figures from the information system on the Market for Solid Soybean Oil Waste in Central America, compiled by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption = "Click to interact with graph"]
In 2016 Central America purchased 1.2 million tons of solid soybean waste, 10% more than in 2015, and the vast majority came from the US.
Figures from the Information System on the Solid Waste Soybean Oil Market in Central Area compiled by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption="Click to interact with the graphic"]
Soybeans, corn and cotton are the main GM crops in Brazil, a country that accepts and promotes genetically modified foods.
In Brazil the number of hectares planted with genetically modified soybeans, corn and cotton amounts to 36.6 million, varieties of crops which according to producers reduce costs, increase production and generate higher profits.
The Inter-American Institute for Cooperation on Agriculture should not overreact to current price conditions, avoiding trade-distorting policies.
A statement from the Inter-American Institute for Cooperation on Agriculture (IICA) reads:
IICA: Rising prices of agricultural products is temporary
The increase in prices for corn, soybeans and wheat will not cause a food crisis in Latin America and the Caribbean, as occurred in 2007-2008, says a report by the Institute.
The key to the global soybean market is China, which consumes 60% of world exports, and it is very likely to continue growing.
An article by Bloomberg News reports that "soybean purchases by China, which buys more than 60% of global exports, are heading towards depleting North American reserves and reducing the amount available to importers in Southeast Asia, said the American Soybean Association, ASA"
In July, world food prices rose by 10% compared to the previous month, with the most noteworthy being corn and soybeans which reached record levels.
A statement from the World Bank reads:
Severe droughts raises food prices and threatens the welfare of the poor
Washington, August 30, 2012. World food prices rose by 10% in July compared to the previous month and corn and soybeans soared to record levels due to a dry summer and unprecedented high temperatures in the U.S as well as in Eastern Europe, according to the latest edition of an Alert report on food prices from the World Bank Group (WBG).
Two months of severe drought in the United States, the world's largest producer of soybeans and corn, has raised prices to record highs.
Yesterday, August 21, soybean prices opened at a record high: a bushel for November delivery, the current benchmark contract, now costs up to $17.26 per bushel (about 25 kg).
The situation is similar with corn, which approached $8.38 in session.
The rising price of its main raw material has decreased profit margins of companies in the food industry, who are looking for alternative suppliers and using future hedge purchases.
Representatives of several companies in the food industry in Costa Rica noted that the escalating prices of wheat, corn and soybeans, the main raw material, are added to the U.S., the largest supplier of grains in the country, facing its worst drought,.
The droughts effect on grain crops has made food prices more expensive around the world, and is affecting the economies of Central American countries.
According to an article in Americaeconomia.com there is an increasing threat of low crop yields in major U.S. agricultural states affected by drought and high temperatures recorded during the month of July.
The prices of products derived from these grains have gone up, with supply having been severely affected by the worst drought in the U.S. in the last 25 years.
An article in Nacion.com reports on the rapid changes that the international price of soybeans, corn and wheat have suffered in the last month:
"Corn went from $572.88 per metric ton, on 24 June, to $814.30 a ton at the close of yesterday on the U.S.