Global food prices hit record high

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#1
[Image: 1b32b12e-aa1a-11df-9367-00144feabdc0.img]

Food prices hit a record high last month, surpassing the levels seen during the 2007-08 crisis, the UN’s Food and Agricultural Organisation said on Wednesday.

The Rome-based organisation said the increase did not constitute a crisis. But Abdolreza Abbassian, senior economist at the FAO, acknowledged that the situation was “alarming”. He added: “It will be foolish to assume this is the peak.”

The jump will increase fears about the repetition of the crisis of 2007-2008. However, poor countries have not so far seen the wave of food riots that rocked countries such as Haiti and Bangladesh two years ago, when prices of agricultural commodities jumped.

The increase in food costs will also hit developed economies, with companies from McDonald's to Kraft raising retail prices.

Higher food prices are also boosting overall inflation, which is above the preferred targets of central banks in Europe.

The FAO said its food price index, a basket tracking the wholesale cost of commodities such as wheat, corn, rice, oilseeds, dairy products, sugar and meats, jumped last month of 214.7 points – up almost 4.2 per cent from November.

The FAO food index is at its highest since the measure was first calculated in 1990. During the 2007-08 food crisis, the index reached a peak of 213.5 in June 2008.

The FAO is drawing comfort from relatively stable prices for rice, one of the two most important cereals for global food security, which remains far below its record high. Rice is the staple of 3bn people in Asia and Africa.

However, the cost of the other critical staple, wheat, is now rising fast on the back of poor harvests.

“This is a high prices situation,” said Mr Abbassian, although he pointed to the fact the costs of cereals – and particularly rice – were below the peaks set in 2007-08. “Rice and wheat are, from a global food security perspective, the critical agricultural commodities, not sugar, oilseeds or meat,” he said.

The increasing costs of sugar, whose price recently hit a 30-year high, oilseeds and meat are the main reason behind the rise in the FAO food index.

The rise of commodity prices makes it likely that the global food import bill will hit a record high in 2011, after topping $1,000bn last year for only the second time. In November, the FAO raised its 2010 forecast to $1,026bn, up almost 15 per cent from 2009 and within a whisker of a record high of $1,031bn set in 2008 during the food crisis.

Agricultural commodities prices have surged following a series of crop failures caused by bad weather. The situation was aggravated when top producers such as Russia and Ukraine imposed export restrictions, prompting importers in the Middle East and North Africa to hoard supplies.

The weakness of the US dollar, in which most food commodities are denominated, has also contributed to higher prices.

http://www.ft.com/cms/s/0/51241bc0-18b4-...z1A9zUxdpc

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#2
I wonder how will this impact food-related companies like Olam International and China Minzhong ? Will they benefit from top-line growth or will government intervention cause a margin squeeze ?
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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#3
OT but interesting video on fake food (egg, grapes, innards) from China..

http://www.youtube.com/watch?v=T55tz4qwFMo&sns=em
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#4
For other countries like our neighbors who have larger populations the governments will step in as Malaysia/Indonesia governments have in the past intervened on basic essentials like sugar cooking oil.

For china it will also be no exception, the CCP fears social unrest more than anything else like tiananmen in the 80's. If food prices will cause unrest then they will definitely step in.

For us I think other than self sufficency in eggs production we don't produce much of anything else, almost everything that you see on your dinner plate is imported. So yes we will be affected lucky thing is our population is small so easier to manage.
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#5
(06-01-2011, 02:25 PM)sgd Wrote: For other countries like our neighbors who have larger populations the governments will step in as Malaysia/Indonesia governments have in the past intervened on basic essentials like sugar cooking oil.

For china it will also be no exception, the CCP fears social unrest more than anything else like tiananmen in the 80's. If food prices will cause unrest then they will definitely step in.

For us I think other than self sufficency in eggs production we don't produce much of anything else, almost everything that you see on your dinner plate is imported. So yes we will be affected lucky thing is our population is small so easier to manage.

Anybody have any idea what our hoarding policy is like? I know we keep stockpiles of stuff but how much and of what I haven't a clue.
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#6
Two related readings:

Food doesn’t cause crises, governments do

Record high food prices stoke fears for economy
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#7
elite KSB anyone? hehe.. yet to try their texas chicken..
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#8
(09-01-2011, 10:08 AM)mrEngineer Wrote: elite KSB anyone? hehe.. yet to try their texas chicken..

Elite KSB don't own Texas Chicken. They are the largest slaughter-house in Singapore and also deals with frozen meat products (mainly from Australia). I think they will earn some rental income from their small investment property this year.

The company which owns Texas Chicken is Select Group Tongue

Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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#9
Next month rubber price up by 20%...if your car tyre worn off better replace it before price increase, hehe...

if commodities and food prices rocketed up beyond control, maybe its a good sign...Why?

Severe inflation will force Interest Rate hike, so pty will crash then follow by stock market...dun rule out this possibility...the American is watching the Asian like a hawk,....wat in their sleeve i dunno.
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#10
(09-01-2011, 02:23 PM)Nick Wrote:
(09-01-2011, 10:08 AM)mrEngineer Wrote: elite KSB anyone? hehe.. yet to try their texas chicken..

Elite KSB don't own Texas Chicken. The company which owns Texas Chicken is Select Group Tongue

Ooops. I was conned when I saw Texas chicken pictures inside the latest AR. Interestingly, Elite KSB is supplying to Nandos as well. Have not tried Nandos in Singapore either.

Interesting counter with quite rapid growth of revenue. But not keen as dividend was just recently distributed. There are more counters that will distribute dividends in May. Smile

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