In its recent Food Outlook report, the Food and Agriculture Organization of the United Nations (FAO) notes that although commodity prices have begun to fall in recent weeks, prices are unlikely to return to previous levels in the near future “due to a host of reasons, including the escalated cost of inputs. Moreover, a number of demand factors such as the need to replenish stocks and expected increases in utilization are keeping prices high despite a favorable global production outlook.” Part of the report includes a special feature on “Volatility in Agricultural Commodities” that sheds more light on the current pricing situation in food.
Another highlight in the report is a section on sugar that notes prices for that commodity have risen 30.7% since Nov. 2007, “in spite of an expected second consecutive year of surplus supplies” in 2007 to 2008. “The apparent disconnection between international sugar prices and market fundamentals illustrates the influence of factors exogenous to the sugar market itself,” notes the report, “including high energy prices, the weakness of the U.S. dollar, and the potential influence of investment funds on the sugar futures markets.”
For complete details, view the report online on the FAO website.
