Food Prices Worldwide Hit Record

Food Prices Worldwide Hit Record Levels, Fueled by Uncertainty, U.N. Says By NEIL MacFARQUHAR Published: February 3, 2011

UNITED NATIONS  Global food prices are moving ever higher, hitting record levels last month as a jittery market reacted to unpredictable weather and tight supplies, according to a United Nations report released Thursday.
Uncertainty itself is a new factor in the market that pushes up prices and will not push them down, said Abdolreza Abbassian, an economist and the grain expert at F.A.O. People dont trust anyone to tell them about the harvest and the weather, so it has to await harvest time.
Four main factors are seen as driving prices higher: weather, higher demand, smaller yields and crops diverted to biofuels. Volatile weather patterns often attributed to climate change are wreaking havoc with some harvests. Heavy rains in Australia damaged wheat to the extent that much of its usually high-quality crop has been downgraded to feed, experts noted.
This has pushed the demand and prices for American wheat much higher, with the best grades selling at 100 percent more than they were a year ago, Mr. Abbassian said. The autumn soybean harvest in the United States was poor, so strong demand means stocks are at their lowest level in 50 years, he said.
Brokers are waiting to see how acreage in the United States will be divided between soybeans, corn and cotton, with cotton fetching record prices, Mr. Abbassian said.
Sugar prices are also at a 30-year high, he said. Prices for cereals are rising but still below their April 2008 peak. Oils and fats are up and close to their 2008 level, and dairy is higher but still below its 2007 peak, the report said. Even positive news, like good rains in Argentina and a strong harvest in Africa, has failed to keep prices from rising.

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