Grain markets flashing warning signs

May 20, 2009

Another food price spike could be on the horizon, analysts told Reuters. 
Consider these factors:
* Grain prices, led by soybeans, have been up since March. 
* South America’s crop is expected to be a disappointment. Crops in both Brazil and Argentina have a poor outlook. In fact, the U.S. Agriculture Department steadily lowered its forecast for Argentina’s soybean crop throughout the year.


* Many will be looking to the United States to come through with a big crop. But U.S. soybean stocks began the 2009/10 marketing year at a five year low. That means there’s not a lot of surplus to keep prices level if there’s any type of disruption in supply or weather calamity.


Signs of an economic recovery, which are just now beginning to be realized, would be threatened if the world were to face soaring food prices reminiscent of last year. 
“It would not be what the financial media is describing today as a green shoot,” said Rich Feltes, senior vice president at MF Global Research. “It’s going to be a green shoot that’s being killed with Roundup Ready herbicide. It’s not going to be good.”

For more information on food price worries, click here.

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