Soaring demand for better quality food from rapidly industrializing emerging markets such as China, supply shortages, increased demand for biofuels, and a surging appetite for food commodities by investment funds, have combined to push prices of basic foods higher and higher in recent months.
Stephane Delodder, managing partner of Netherlands-based consultancy iFuel Corporate Advisory, told a conference the problem of rising food prices would persist for some years.
Market forces should eventually help rebalance supply and demand, especially in markets which are not highly regulated, but this could take some time.
“(It could be) a few years at most before the situation returns to normal,” Delodder said.
He said grains and oilseed futures markets, which have corrected down recently after meteoric rises, may already be signaling that supply will rise as farmers raise plantings. Continue reading »