MUMBAI (Commodity Online): The food prices across the world are skyrocketing vehemently in spite of better stock position. According to UN’s Food and Agriculture Organization, global Food Price Index moved up sharply for the fourth consecutive month.

However market conditions are different from those that triggered the food price crisis that started two years ago, FAO said in its December Food Outlook report published recently.

The index averaged 168 points in November, the highest since September 2008. That was still 21 percent below its peak in June 2008. Prior to the price spike of 2007/08, the index never exceeded 120 points and, for most of the time, was below 100 points.

FAO has identified several factors for the prices surge across the globe, which includes, low levels of world cereal stocks; crop failures in major exporting countries; rapidly growing demand for agricultural commodities for befouls and rising oil prices,” the FAO report said.

Today, world cereal stocks are at more comfortable levels, although some markets are facing tight conditions. In general supplies held by exporters are more adequate to respond to rising demand than they were during the price surge period.



The reports pointed out that as the price strengthening accelerated, several other factors emerged to reinforce the upheaval; most importantly, government export restrictions, a weakening United States dollar and a growing appetite by speculators and index funds for wider commodity portfolio investments on the back of enormous global excess liquidity.

What made the 2007/08 price spike exceptional was the concurrence of so many factors culminating in an unprecedented price rally and the fuelling of volatility.

Post your comment  (0)

Connect:

Post to Twitter

Post to Facebook