The rally in crop prices over the last 12 months, combined with increased shipping costs, is fueling inflation of food prices. Costs of shipping bulk grains from production regions in the U.S. to global users have roughly doubled from last year, according to Reuters.
Shippers cite rising fuel costs, tighter supplies of shipping vessels and longer port turnaround times. An economist at the National Australia Bank tells Reuters, “For years, buyers enjoyed low grain and freight prices. I see no immediate end to high freight costs.”
Moving grain from Australia to Asia now cost $30 per metric ton, compared to $15 last year. Shipping from the U.S. Pacific Northwest to Asia now costs $55 per metric ton, compared to $25 last year.
Global food prices fell in June, the first decline in a year, according to data from the Food and Agriculture Organization of the United Nations. However, prices reached ten-years highs before the decline posted last month.