Food prices to rise sharply as more struggle to put meals on their tables
Posted Monday, January 24 2011 at 00:00
“Going forward, commodity prices are expected to rise a bit further supported by the strength of global demand, especially from emerging economies,” said the IMF, adding that the rise will be steepest in oil and metal prices.
While the latest import data indicates that consumption of coffee in importing countries picked up strongly in 2010, after a weak first quarter, especially in the European Union, the EIU continues to take a fairly gloomy view of demand growth, which will be constrained by increases in retail and coffee bar prices in response to higher wholesale costs (particularly for the popular mild arabica variety), as well as by renewed concern about the EU debt crisis and the outlook for the euro.
For tea, the EIU expects the growth in consumption to moderate, averaging just under 2 per cent per year in 2011-12, as strong demand growth in the Middle East, North Africa and the US is offset by weakening demand growth in India (by far the world’s largest tea consumer), higher wholesale costs than in recent years and an end to the recent restocking.
“Based on current tea production trends, and assuming normal growing conditions, we continue to forecast a further surplus,” it says while adding that the forecast of world rice consumption shows a rise to almost 456m tonnes by 2012/13, exceeding consumption and allowing a further increase in ending stocks to about 91 million tonnes, the highest in seven years.
The EIU forecasts that world maize consumption will reach a record 838m tonnes in 2010/11, up by 3.3 per cent year on year, owing to firmer animal feed demand and increased production of grain-based ethanol, while wheat consumption will reach a record 660 million tonnes in 2010/11 (July-June), an increase of 1.8 per cent in the previous year.
Shortfalls caused by poor weather pushed up world sugar prices to 30-year highs in 2010.
But EIU expects imports to revive as production bounces back in response to high prices and more normal weather conditions, allowing consumption to grow by 2.3 per cent in 2011/12 and by 2.7 per cent in 2012/13, to 176.2m tonnes.