Wednesday, December 1, 2010

Tighter food supplies, high prices to persist

Svetlana Kovalyova
Reuters

World food prices are set to remain high in 2011/12 with supplies tightening and demand running strong, the United Nations' food agency economist told Reuters on Wednesday after a new jump in prices.

"The chances of prices to remain high and extremely volatile well into 2011/12 are stronger than ever," FAO's economist Abdolreza Abbassian told Reuters in a telephone interview.


Food prices rose in November on the back of surging sugar and strong gains in cereals and oils.

That was despite the lack of fundamentals which could have justified the rises and also a stronger dollar, which usually sends agricultural commodities prices lower, Abbassian said.

"That shows that there is tremendous market sentiment in favor of high and perhaps still rising prices," he said.

Agricultural commodities demand remained strong, triggering an increased use of reserves and fuelling concerns about tighter supplies next season, especially because the level of new plantings situation in producing countries remained unclear, he said.

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