Global Agricultural Commodities Rally Fueled by Climate and Geopolitics
· AA Tarım & Ekonomi
Geopolitical tensions, climate anomalies, and biofuel demand have stirred global agricultural markets. Alongside a surge in grain prices, cocoa has continued its upward trend for the sixth consecutive month.
Geopolitical and Climatic Pressures in Grain Exchanges
International agricultural markets are experiencing a volatile period due to supply concerns triggered by geopolitical risks and adverse climatic conditions. According to Chicago Mercantile Exchange data, prices per bushel have increased by 21% for wheat, 16% for corn, 8.5% for soybeans, and 9.2% for rice. The conflict between Russia and Ukraine has directly impacted wheat supply by bringing grain loading activities at Black Sea ports to a near standstill. Insufficient monsoon rains in Asia, particularly in India, have put pressure on rice yields.
Biofuel Demand and Industrial Agricultural Products
Significant price fluctuations were also observed in agricultural products traded on the Intercontinental Exchange. Prices per pound increased by 21.5% for sugar and 13.9% for cotton, while coffee prices fell by 1% amid rainfall expectations in Brazil. Rising oil prices have driven producers to shift from sugarcane to ethanol production, pushing the sugar market upwards. Approximately 60% of the world's corn production is used in industrial applications, and the demand for biodiesel is increasing corn prices, while drought in the US continues to negatively affect cotton yields.
Historic Rally Begins in the Cocoa Market
The trend in cocoa prices, which experienced a record annual decline of 48.1% last year, has completely reversed. According to Intercontinental Exchange data, cocoa prices per ton, which started the year with sharp declines in 2026, fell by 31.3% in January and 30.7% in February, before rising by 14.3% in March, 8.2% in April, 9.9% in May, 29.4% in June, and 6.3% in July. With a 25.5% surge in the last month, reaching $6,771 per ton, cocoa has extended its uninterrupted rally to the sixth month.
Climate Crisis and Supply Shortage in West Africa
Daniela Corsini, Senior Commodity Economist at Intesa Sanpaolo, explained the upward dynamics in global markets with the following words:
'The main reasons for the increase in cocoa prices include the war in the Middle East increasing energy costs, problems created by climate change, and record temperatures caused by El Nino negatively affecting harvests.'
Stating that the Harmattan winds in West Africa, intensified by El Nino, have damaged trees, Daniela Corsini issued the following warning regarding global production forecasts and demand pressure:
'Therefore, many analysts have lowered their 2026/27 global surplus forecasts, and some have warned of the risk of a cocoa supply deficit in the global market again, particularly due to strengthening demand in Asia.'
Expert Assessments and Next Season Expectations
Oran van Dort, Commodity Analyst at Rabobank, shared the risks regarding new season expectations with the following assessment:
'Concerns about the 2026/27 production have been influential in the cocoa rally that began at the beginning of last month. Among these concerns are the El Nino risk and the slow crop development and flowering in Ivory Coast and Ghana.'
Rabobank Commodity Analyst Oran van Dort noted that speculative investors are pricing in the worst-case El Nino scenario and weak crop expectations, and that the upward pressure in global agricultural commodity markets continues with the production decrease in South America and China's soybean demand.