War, weather push crop prices to biggest monthly gain Since 2012

Crop prices surged to their largest monthly increase since 2012 due to a combination of wars, extreme weather, and rising energy costs. The Bloomberg Agriculture Spot Index, tracking 10 major products, jumped over 13% in August. Wheat prices reached a three-year high, as attacks on Black Sea ports reduced shipments from a key growing region.

Sugar and cocoa prices also jumped more than 20%, driven by concerns over weather impacts, particularly an intense El Niño affecting West African crops. While supermarkets may take time to feel the effects of pricier crops, energy and transport bills, exacerbated by the Iran conflict, are adding to concerns about everyday food costs, from bread to meat and dairy.

Ukrainian and Russian grain exports have slowed as both nations target enemy ships and ports. Russia plans to escalate attacks after concluding peace talks have failed. Ukraine is stockpiling silo bags, while Russia considers rail subsidies to reroute some grain exports to the Baltic Sea. The two countries together account for over a quarter of global wheat exports, leaving limited options to fill the supply gap.

Unsold grain is accumulating, and Ukraine predicts reduced winter wheat planting for 2027. Poor weather, including summer heat waves in the US and Europe, has also harmed corn harvests. El Niño's potential impact on next year's crops adds to worries. Rising fuel and fertilizer costs, triggered by renewed Middle East tensions and the US striking Iranian rocket launchers, further complicate the agricultural landscape.

Cotton futures hit near two-and-a-half-year highs as oil prices climb, making natural fibers more competitive with petroleum-based alternatives.