Global food price index surged 25% in 2010
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A United Nations index of global food costs hit a record high in December, surpassing the previous peak reached during the commodity-price surge of mid-2008.
The index (charted at left), which tracks the cost of 55 food commodities including corn, sugar, meats and oilseeds, jumped 4.3% to 214.8 last month and shot up 25% for the year, after rising 20% in 2009.
Commodity costs in general were boosted in the second half of last year by rising global consumption as the economy continued to recover. Demand by speculators also drove some prices. So did constrained supplies: Crop failures in Russia, which suffered a record heat wave last summer, helped send grain prices soaring, for example.
In U.S. futures trading the cost of a bushel of wheat jumped 47% in 2010, from $5.41 a bushel at the start of the year to $7.94 by the end of December. The price on Wednesday: $8.08 a bushel.
Wheat still is well below the peak of $12.82 a bushel reached in March 2008, however.
Rising food prices have fueled inflation in many emerging-market countries over the last year, in turn triggering credit-tightening moves by central banks in India and China, among others.
The surge in food costs in 2008, which lifted the U.N. price index to 213.5 by June of that year (before the global recession hit and prices tumbled), sparked unrest in poorer countries and forced some nations to ban rice exports to avoid more social upheaval.
Could the world be headed back down the same path?
From the BBC:
Despite high prices, [U.N.] economist Abdolreza Abbassian said that many of the factors that triggered food riots in 2007 and 2008 -- such as weak production in poor countries -- were not currently present, reducing the risk of more turmoil. But he added that ‘unpredictable weather’ meant that grain prices could go much higher, which was ‘a concern.’
-- Tom Petruno