Crop production may be rising but not enough to bring down high and volatile agricultural commodity prices this year, according to the latest analysis from the FAO.The high pricing is also likely to remain into 2012, said the Food and Agricultural Organization (FAO).
Abdolreza Abbassian, FAO grain analyst said: “It all comes down to supply and demand and the supply situation, as good as it may seem, is barely meeting demand and therefore prices remain at these stubbornly high levels. They have been like this for almost six months and the prospects… for the new season, for 2011-2012, seem to suggest that the same situation may prevail for still some time.”
The report highlights a sharp rundown on inventories and only modest overall production increases for the majority of crops as reasons for continuing strong prices.
Maize and wheat yields in Europe and North America face the threat of poor weather conditions, so the next few months will be critical in determining how the major crops will fare this year, the report states.
The FAO said that global wheat output is expected to be 3.2% up from last year's reduced crop, mostly reflecting improved yields in the Russian Federation.
Likewise, sugar is expected to surpass consumption for the first time since 2007-2008.
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