Global agricultural commodity prices are set to rise, according to the Economist Intelligence Unit’s (EIU) food, feedstuffs and beverages (FFB) index.
After peaking at over 11% last year, the EIU has predicted the index will reach 30% in 2011 with grain prices in particular to rise dramatically later this year. This comes as a result of very high prices that began the year and reflects an increasing demand for supply.
Last month there were signs that prices were easing - notably for cocoa with the political unrest in Cote d’Ivoire winding down - but prices will remain comparatively high until 2012.
Grain Prices Trend Upward
In the first part of 2010, grain prices were down, thanks to profitable harvests in previous years. But widespread crop damage later in the year set prices on an upward spiral that continued until February 2011. This in part reflects the sharp rise in the FFB index, since grain is significantly weighted in the EIU’s assessment criteria.
Wheat Prices to Remain High in 2011
Wheat prices will stay high in 2011; but with higher quality and quantities of crops expected from now until next year, the EIU expects current inflated levels to decrease in 2012. Fresh wheat crops from Russia will also contribute, following the wildfires that ravaged their supplies in 2010.
Sugar Prices to Fall
Sugar supply in 2011 is expected to improve, following poor harvests in previous seasons. Prices are currently at their peak, and will begin to fall by the end of the year, as will be the case for beverage commodity prices.
Oilseed Stock Remains Low
Oilseed stocks are expected to remain low, which will lead to a further 32% rise in prices in 2011.
Key Market Players - Global Agriculture
- China is the number one producer of grain; the United States is the biggest exporter.
- The United States is the biggest producer of wheat, followed by Russia and the EU.
- Egypt is the largest importer of wheat in the world.
- Argentina is the world’s biggest exporter of sunflower oil.
- France is the biggest producer of sunflower oil in the EU, but also one of the biggest importers.