Washington, DC
May 2, 2008
Source:
USDA Economic Research Service
By Ronald Trostle
Outlook Report No. (WRS-0801)
30 pp, May 2008
World market prices for major
food commodities such as grains and vegetable oils have risen
sharply to historic highs of more than 60 percent above levels
just 2 years ago. Many factors have contributed to the runup in
food commodity prices. Some factors reflect trends of slower
growth in production and more rapid growth in demand, which have
contributed to a tightening of world balances of grains and
oilseeds over the last decade. Recent factors that have further
tightened world markets include increased global demand for
biofuels feedstocks and adverse weather conditions in 2006 and
2007 in some major grain and oilseed producing areas. Other
factors that have added to global food commodity price inflation
include the declining value of the U.S. dollar, rising energy
prices, increasing agricultural costs of production, growing
foreign exchange holdings by major food importing countries, and
policies adopted recently by some exporting and importing
countries to mitigate their own food price inflation.
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