Blog: Dean BestSugar in spotlight as commodity prices "sky-rocket"

Dean Best | 25 October 2010

With concern over commodity prices growing, analysts at Rabobank have issued a timely update on the prices of key agricultural foodstuffs.

On Friday (22 October), Rabobank said global agricultural prices "sky-rocketed" during October and, after wheat grabbed the headlines over the summer, sugar and corn are now in the spotlight.

Brazil, one of the world's largest sugar producers, has seen domestic prices rise strongly in the last month due to "tight" domestic supply, Rabobank said. Concerns over the weather in Brazil are affecting the current crop and "escalating the risk premium" for the 2011 harvest, the analysts added.

"Global sugar stocks remain low," Rabobank warned. "With continuing evidence of strong global demand, supply is expected to be tight for the next 18 months."

The risk of higher corn imports by China is surrounding the price of that commodity and "pushing wheat into [the] backseat", Rabobank said.

Earlier this month, the US cut its forecast for corn production and the combination of lower yields in that markets and uncertainty over stock levels in China means there could be pressure on the price of corn.

The US, however, now has the cheapest wheat available for export due to currency fluctuations.

Nevertheless, Rabobank's latest pronouncements on sugar and corn are sure to increase nerves in the food industry over commodity bills.


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