Global prices of grains will most likely decrease within the next year or two as farms register higher harvest rates than demand hike, according to the Organization for Economic Cooperation and Development and the United Nations.
Secretary-general of the OECD, Angel Gurria, told reporters in Rome that more grain inventories will result in stable food costs, unlike in the past seven years when supply deficits and trade barriers have fueled record hikes in prices. A report published on Friday by the OECD and UN’s Food & Agriculture Organization said there will remain a solid demand for agricultural products through 2023, albeit surging at slower pace compared with the last 10 years.
“Production is on the rise and prices are falling after major spikes. Global markets are returning to more normal conditions,”Gurria is quoted by Bloomberg as saying.
Record world harvests in the last one year for crops such as corn, soybeans and wheat saw benchmark prices on the Chicago Board of Trade for the three commodities drop. Corn prices entered a bear market in July and Soybeans have dropped 15% lower than the previous year as most crops in the US, the world’s top producer, develop in favorable weather.
According to the report, global wheat costs may fall every year through 2016-17 season, as coarse crops such as corn decline this year and then remain little changed over the next 10 years when adjusted for inflation. World costs of meat, dairy and fish are projected to rise in the next couple of years while dropping in the medium-term when adjusted for inflation, said the report.
In the meantime, grain prices fell to their lowest levels in several years on Friday, after the US Department of Agriculture forecast that inventories will top expectations, Reuters reported.
Font-month soybean contracts slid 34 cents to $12.95-3/4 per bushel.
To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at email@example.com