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Food prices are soaring to their highest level in almost a decade
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Prices of grains and other staples are significantly higher from a year ago, due to global supply chain disruptions, poorer harvests and speculation
Despite central bankers and governments touting low inflation to gin up their borrowing prowess, food prices have reached their highest globally in almost seven years.
According to the United Nations Food and Agriculture Organization (UNFAO) food price index for January, food prices are up by 10% from a year ago, their sharpest rise since July 2014.
Fed by a combination of lower tan expected production in the U.S. and substantial corn stockpiling by China, food commodities chalked their eight consecutive monthly increase, the longest rising streak in a decade.
And while prices are not yet at the level seen during the food crisis of the late 2000s, there is concern that rising food prices could become a problem for less prosperous countries that depend on food imports.
China is looking to restore its grain reserves as well as keep a lid on rising domestic food prices as it rebuilds its hog herd that was decimated by African swine fever and that has put upward pressure on grain prices.
Disruption in the shipping industry is also not helping matters with freight prices for grains and oilseeds at their highest since before the pandemic, according to data from the International Grains Council.
The UNFAO has warned that the lowest grain inventories in five years and larger volumes of global trade, made markets far more vulnerable to production shortfall, potentially precipitating a sharp move upwards for food commodity prices.
Grains and soybeans have seen a tremendous rally after years of favorable weather led to bumper crops and depressed prices.
Corn is up 45% year-on-year to US$5.55 a bushel, wheat is up 16%, rice has surged by 27% and soybeans are up 56% to US$13.71.
Excess liquidity in the markets because of central bank monetary policy is not helping matters either, with traders speculating on food commodity futures and the future price of corn projected to be at its highest level in a decade.
