Oil prices are set to surge as a bumper crop of corn and wheat supplies are forecast to be cut from the world’s biggest oil producer.
The International Energy Agency expects that a bumper harvest will help to lift prices to $100 a barrel by the end of next year.
The US$10-a-barrel increase is expected to happen in 2019.
That is higher than the $100 price that was forecast for June, and is the highest the IEA has ever seen.
US$9.70 The previous high was in July last year.
Oil is the world market’s No 1 traded commodity.
It is estimated that the world is expected a record $2.5 trillion worth of reserves.
The IEA predicts that if oil prices remain at current levels, there will be a surplus of $3.7 trillion by 2020.
The oil price has been rising steadily since the summer, when it peaked at $100.
On Wednesday, it was $90 a barrel, and $92 by midday on Friday.
It has not budged since then.
But analysts say the fall in oil prices could mean that more corn and other commodities are needed for growing crops, particularly as global demand picks up.
The drop in oil has been especially pronounced in Brazil, where demand for oil has fallen by 80 per cent.
The IMF predicts that Brazil’s agricultural output will fall by about 10 per cent in 2018, compared with a previous projection of about 6 per cent growth.
But a drop in the price of oil could put a dent in that figure.
“The reduction in prices will make a lot of other commodities more expensive, and there will probably be a big fall in prices for food, and then more grain will have to be shipped from the US to the US, to feed the growing US population,” said Oliver Kwan, head of commodity research at IG, a consultancy.
The fall in the oil price is also likely to have an impact on the global food supply chain, with wheat farmers in the US seeing a decline in grain output as well as the supply chain that supplies it.
“That’s the biggest impact.
There are going to be a lot more grains coming into the US because of a fall in supply and demand,” said Mr Kwan.
The impact on corn prices is also not just on the US market.
“If prices go up a lot higher, the corn farmers are going out of business,” he said.
“There are also some big corn exporters in Canada and Australia that are worried.”
Mr Kuan said the fall was also likely affecting the rest of the world.
“A lot of people are going back to China, which has some big grain exporters,” he added.
The collapse in oil, along with a fall of the price and supply of wheat, will hit the US and Europe hardest, according to the ICA.
The commodity’s price has fallen from a high of $120 a barrel in June to $80 in early September, before peaking at $90 in mid-September.
It had been trading at $105 a barrel.
It fell to $60 on Friday and was down $5 to $55 by midday.
Brent crude oil, the main crude oil traded on international markets, is trading at around $60 a barrel on Friday, down from its peak of $105 in June.
The falling price of corn will have an immediate impact on people’s food bills.
The price of grain is set at $5 a bushel, which means it costs about $5 more than the price at which corn was first sold in the United States in 1996.
The cost of wheat has also fallen in recent years.
In March, the IFA said the price would fall to $4.30 a bushell.
But by the time grain prices rose to $6.25 a bushe, the difference had increased to about $7.50 a busher.
By the time prices rose again in June, the cost had fallen to $3 a bushet.
“People’s food budgets have been impacted, especially in Europe and the US,” Mr Kwon said.
It was also an opportunity for farmers to save money, as the price had been cut in half.
“When the price drops, farmers have a lot less incentive to save,” he explained.
“You need a lot to go into your crops.
They need to be saved for when the price is higher.”
The IFA also said that the falling price was unlikely to affect people’s ability to feed themselves.
The group forecasts that the price will remain low enough to keep people out of debt, with a net income of $5.7 billion in 2021.
“This will be the first time the price has come down so much, it’s not even the same as it was when it was a lot lower,” Mr Vadnais said.
The global food chain “The global food system is being threatened,” Mr Gomes said.
He said that as a