Rabobank get it wrong again as"There is no grain shortage"
Consumers may not feel the worst effects of expected higher meat and dairy prices until the New Year.
Livestock producers in many countries are temporarily protected from high feed costs because they forward purchased feedstuffs.
And once the full impact of high feed prices hits home, herd sell-offs will increase the supply of livestock based foods, keeping a lid on retail price rises.
As a result, global food price peaks at new record levels are not expected until next summer.
However, a few cent extra for an loaf of bread is likely to be one of the first signs of rising prices in the shops, after UK flour millers recently shoved up prices about 15% to 20% for major flour users.
There could be early price rises also for drinkers. Like other grains, malt barley price increases have ranged between 40% and 80% — but the more serious issue for brewers is a price increase ranging from 20% to 100% for hops. The global acreage dedicated for hops growing has fallen by half in 12 years.
According to Rabobank’s report entitled "Re-entering Agflation: World Food Prices to Hit Record High", there will be less social and political pressure from rising food prices, compared to the last price peak in 2008.
Although maize and soybean prices are at record highs, wheat and rice prices are more than 30% below 2008 peaks, due to satisfactory yields and stocks of these food staples.
Instead, it is the animal protein and dairy sectors that are likely to be squeezed by higher feed costs, with lingering effects maintaining upward pressure on global food prices, because sold off herds (especially cattle) take longer to rebuild.
In the short term, Rabobank see significant pressure on quickly processed parts of the global grains and oilseeds complex, such as milling, brewing and ethanol.
Longer term, and most importantly, sustained higher prices and lags in animal protein herd adjustments will push meat and dairy prices up, taking the effects of 2012 into 2013 and 2014.
Source: irishexaminer.com