World on track for record food prices 'within a year' due to US drought

They are being driven upwards by the climb in grain and oilseed prices as US crops weather the country's worst drought since 1936, while the farming belts of Russia and South America suffer through similar water shortages. What we are seeing represents the third major rally in global grain and oilseed prices in just half a decade.

Worse is to come, new research warns. World food prices look set to hit an all-time high in the first quarter of next year – and then keep rising, according to the analysis from Rabobank, a specialist in agricultural commodities. By June 2013, the basket of food prices tracked by the United Nations could climb 15pc from current levels, according to the bank's analysts.

"The coming year will see the world economy re-enter a period of agflation as grain and oilseed stocks decline to critically low levels, pushing the FAO [Food and Agricultural Organisation] Food Price Index above record nominal highs set in February 2011," they say. Read more >>

Mass slaughter of millions of farm animals worldwide set to push food prices up 14%

The mass slaughter of millions of farm animals across the world is expected to push food prices to their highest ever levels. As well as hitting consumers' pockets, the predicted 14% jump in food prices will also dash the Bank of England's hopes of pushing inflation down to 2% by next year.

Farmers across the world have begun a mass slaughter of their pig and cattle herds because they cannot afford the cost of feed, which has soared following the worst US drought in living memory, according to a report published on Wednesday. Experts at investment bank Rabobank warn that the mass "herd liquidation" will contribute to a 14% jump in the price of the average basket of food by next summer.

On Tuesday, the Office of National Statistics (ONS) said lower food prices had help bring inflation down to 2.5% in August. That brings it closer to the Bank's 2% target and should help consumers who have seen their spending power shrink as wages fail to match inflation. The Bank expects inflation to ease below the 2% target by early next year, but that could be scuppered by rising food, oil and commodity prices. Read more >>

Wheat Poised for Longest Rally in 14 Months

Image via WikipediaWheat rose in Chicago, set for the longest winning streak since November 2009, as North African importers boost purchases to curb food inflation amid riots over high prices.

Egypt purchased 659,800 metric tons of U.S. wheat from the start of the marketing year on June 1 through Jan. 6, U.S. Department of Agriculture data show. That’s up from 366,000 tons last year, according to the USDA. Tunisia bought 100,000 tons of wheat on Jan. 24, Reuters reported. Elevated food prices contributed to outbreaks of rioting in both countries.

“In the case of wheat, prices are reflecting food-security issues we’ve seen recently,” said Erin FitzPatrick, an analyst at Rabobank in London. “There’s certainly some correlation with a lot of those countries coming into the market and saying they want to increase their stock levels.” Read more...