2008 commodity price shock redux

Spot price of Soybeans, Corn & Wheat over the past month, 2012

I’ve written before about the possible upside to commodities in 2012 but since somewhere its time to eat let’s focus on agricultural commodities. The chart above show the surge in prices over the past month for Soybeans, Corn & Wheat, up 10.44%, 24.39% and 37.6% respectively since June 13th. Why? Simple question, no single simple answer but since April, 2010 India has repeatedly banned then unbanned exports, destabilising the markets. Russian production of wheat has fallen by 60% since August 2010, but the big one has to be the summer 2012 US Drought and heat wave in The United States, by some accounts the worst since the 1930s. Is that it then? No, the UN’s Food and Agriculture Organisation warns that “the world should be prepared for even higher prices”, concluding that present conditions show evidence of the reversal of a ”a four-decade-long downward tendency in prices of agricultural commodities. “.

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