Expect A Global Shock To World Food Prices By Next Year

Rabobank thinks the consumer impact could be less painful this time around compared to 2008, when there were severe shortages of wheat and rice. That is because today's shortages are being seen more in crops used as animal feed, such as corn and soybeans. Photo: Reuters

World On Track For Record Food Prices 'Within A Year' Due To US Drought -- The Telegraph

Brace yourself for some painful "agflation". That is the shorthand for agricultural commodity inflation, otherwise known as rising food prices.

They are being driven upwards by the climb in grain and oilseed prices as US crops weather the country's worst drought since 1936, while the farming belts of Russia and South America suffer through similar water shortages.

What we are seeing represents the third major rally in global grain and oilseed prices in just half a decade.

Worse is to come, new research warns. World food prices look set to hit an all-time high in the first quarter of next year – and then keep rising, according to the analysis from Rabobank, a specialist in agricultural commodities.

By June 2013, the basket of food prices tracked by the United Nations could climb 15pc from current levels, according to the bank's analysts.

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My Comment: The consensus is that the impact of higher food prices will be less severe than in 2008. But .... and this is a big but .... if the U.S. drought should resume in 2013 (or in any other major food producing country) .... I expect this impact will then be severe, and it will primarily impact countries that are already suffering from political unrest and turmoil.