A global commodity crunch is driving prices up with little relief in sight.Freezes in China,droughts in Russia and Australian floods,coupled with emerging market diets that are tending toward more protein and sugar,are generating costs that lead to civil unrest worldwide.
Citigroup says that corn and soybean prices will remain elevated for the next 6-12 months.U.S. corn and soybean production are down.Algerians are paying up to 30% more for staples.
Abdolreza Abbassian of the UN Food and Agriculture Organisation thinks we are entering a very precarious situation.We do not see any good news coming in from the crop side or the weather angle.In terms of prices,we are already as bad as 2008.Commodity exchange traded funds are also affecting prices as investor demand for shares continues to increase.
We would like rules and regulations and transparency by investors,Mr.Abbassian said.The weather will be the main driver in the months ahead.It is a very unpredictable and often unfavorable weather outlook,the FAO official noted.
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