The rise in food prices around the globe has led to riots in countries such as Haiti. Today we learn that, thanks to wet weather in the U.S., food costs will continue to increase.
According to Bloomberg News, corn hit a record-high price and soybeans rose to a three-month high as excessive rains in the U.S. Midwest flooded some fields.
John Reeve, associate director for agricultural commodities at UBS AG in Singapore, said in the article: "Firstly, the sharp rise in prices was catalyzed by wet U.S. weather. Secondly, and more importantly, the size of the response signals just how low grain and oilseed inventories are."
Meanwhile, dry weather in western Australia is wreaking havoc with that area's grain crops. Total grain output may be between 10 million metric tons and 12 million tons this harvest, less than initial government estimates, after a dry May.
This news comes after the UN's Food and Agriculture Organization (FAO) and the Organization for Economic Co-operation and Development (OECD) suggested that in the next 10 years food prices will remain well above the levels of the last decade, according to All Africa.
The various factors contributing to the rise in food prices include high oil prices, changing diets, urbanization, economic growth and expanding populations, but also the growth in demand for biofuels.
According to the report, the FAO and OECD said that world ethanol production has tripled between 2000 and 2007 and is expected to double again in the next decade. Climate change, low stock levels and speculation could also add to price volatility.
An excerpt of FAO's Food Outlook report indicated: "Prices in real terms are projected to be 10 percent to 35 percent higher than in the past decade. Even a bumper harvest expected this year will do little to ease the plight of the world's poor."
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