Where are the food prices going this year?

[Global Trading Ent]

After seeing the release of the perspective plantings last week for the Agricultural market. This has now reopened the issue of Food Price increase again to the agenda. After seeing what happened last year with the Wheat crops and the subsequent prices. Are we looking at another year in which the prices will run away and past 2007-2008 highs?

There is a clip from CNBC about this from 1st April 2011 by Erkut Ozer.

http://www.cnbc.com/id/15840232?video=1865312037&play=1

 

[fernando999]

Interesting video. I think a lot of the recent price move in softs has been to do with increased media attention and the fact that a lot of new money is now jumping into those markets. Iv had a dabble myself even though my bread and butter trade is the Ted - and I know absolutely nothing about farming/crops/or agricultural prices.

Do you reckon that between us on the T2W board we've got enough size to bring the market lower? Lol. I don't fancy having to pay more for my oats in the morning

 

[Global Trading Ent]

I totally take on board your concerns that some of the price movements may be down to new money coming into the market. However, the issue is far more complex than just the influence of new money entering the market. We have Stocks to Usage in the US for Corn the tighest it has ever been, and that's with optimal planting conditions factored in, and as we saw last year the weather is very unpredictable. The price movement we saw in 2007-2008 was in part due to a certain amount of speculator money coming in, but that was different to the scanerio we face this year.

Last year we had six sigma floods, massive cyclones, snowstorms and droughts, and this was all at unpresedented levels throughout the world! So, batten down the hatches and be ready for a volatile year in the Softs complex!

 

[dmt257]

Here is a idea for our idiotic goverments....

Stop mandating that we put food in our damn vehicles and stop printing money so commodities can take a breather. Technological advancements can more than meet any increase in demand in normal fiscal cirmcumstances, but when the markets are full of free and easy money it will go somewhere

 

[josephine123]

Hi All,

I am not an economist but have heard about the law of demand and supply. Prices rises in following conditions:

1. when demand for a particular commodity is high but other factors are constant then price will be high.
2. keeping other factors constant if supply of a particular commodity is less the also price will increase.

So, I think prices might not go down in future.

 

[Global Trading Ent]

Hi All,

I agree that the price of Corn is influenced by the production of Ethanol, which is blended into the fuel we use at the pumps (US). However, I think the main factor has been a rise in demand from the developing nations, as their diets are becoming more complex, namely China.

I also agree that technological advancements in crop production are increasing production in certain circumstances, i.e More resilient to weather factors. However, these factors are not always sufficient to counter-act against the rise in demand and extreme weather occurances.

As a result the move in the Softs is biased to the upside!