ECONOMICS

Trends in Agricultural Commodity Prices

Trends in Agricultural Commodity Prices

Introduction

This assignment will discuss the topic of increasing food prices in the world. This will also discuss the demand and patterns of demand for products like wheat, corn and other agricultural products. In the last past, the factors that affect the prices of the agricultural products in the long run will be included.

Discussion

Part One

The worst drought for fifty years now is destroying one-sixth of the U.S. corn crop and at least 10 per cent of the soybean. And as the United States, major exporters of cereals (first in the world for corn but also in the lead for soy and wheat), are for agriculture what Saudi Arabia is to oil, that is the shock that becomes planetary when the agricultural prices set to rise worldwide.

Moreover, this year, "greenhouse effect" and poor rains have not affected only America: drought in Russia and Kazakhstan, while in India, where the monsoon arrived late and took a little water, the crop suffers. Cereal prices are already rising, with that of corn rose in a month by 39 percent: which are affected in the first place, the farms, with the price of meat which is likely in the coming months, earning a 5 percent (Elliott, n.d. 2012). The world faced a serious food crisis, but not as bad as that of 2007-2008 when it recorded a surge in prices that awful, all over the world, in a state of misery pushed another 100 million people no longer able to feed themselves with their modest income.

If this time the outlook is a bit 'less dark, it is because this year the U.S. had launched a farmers planting record with the intention to greatly increase the volume of production. Even with the loss of a third of the sown, then, at the end of the decline in production compared to 2011 should not exceed 14 percent. But most of all (and paradoxically) is to help the global stagnation.

Use for agriculture, however, is an emergency and the Obama administration is caught between two fires: on one hand farmers, who absorb huge quantities of maize for their animals and the giants of the food industry, like Nestlé, already feeling the pressure of prices. These groups wish it to be removed the obligation to allocate part of cereal production to bio-fuels. If 40 percent of U.S. corn now used to produce ethanol returned to human food, in fact, food prices would be affected positively. On the other hand, there is the pressure of producers around bio-fuels have created a real economic system that is not easy to dismantle (www.forbes.com).

In between is the U.S. Secretary of Agriculture, Tom Vilsack. In a sharp response to the request even by the UN to stop using corn as fuel, the Minister of Obama stated that the current difficulties are temporary and still not be sufficiently serious to require a radical rethinking of the strategy of agro- country. In addition, remove the ethanol from the mixture ...