NEWS | Wednesday, 09 January 2008

Oil crisis leads to a hefty increase in prices of agricultural commodities

Charlot Zahra

As the price of crude oil reached USD 100 at the start of the year there are concerns that the price of agricultural commodities such as corn, wheat, soyabeans, coffee, sugar and cocoa will continue to rise further this year.
This would lead a further increase in the prices of staple foods that are derived directly or indirectly from them, such as bread, milk, butter, pasta and cheese.
In fact, Eurostat’s latest inflation statistics for November last year published recently show that the price of food in Malta increased by 7.80 per cent over the previous year.
An analysis of the most important agricultural commodities traded on the international markets shows that in the past year, all of them registered a substantial increase in price, except for white sugar, which registered a slight decrease in value during this period.
For instance, yesterday the price of corn traded on the Chicago Board of Trade reached 466.25 USD for a March delivery, a decrease of 0.11 per cent on the previous session. However year-on-year, the price of corn traded on the CBOT increased by 28.44 per cent.
Likewise, yesterday the price of wheat traded on the Chicago Board of Trade reached 903.00 USD for a March delivery, a decrease of 3.06 per cent on the previous session. However year-on-year, the price of corn traded on the CBOT increased by 94.66 per cent.
Yesterday, the price of soybeans traded on the Chicago Board of Trade reached USD 1,249.75 for a March delivery, a decrease of 1.01 per cent on the previous session. However year-on-year, the price of soyabeans traded on the CBOT increased by 88.22 per cent.
The price of soybean meal traded on the Chicago Board of Trade reached USD 346.7 for a March delivery yesterday, an increase of 0.64 per cent on the previous session. Year-on-year, the price of soybean meal traded on the CBOT increased by 82.75 per cent.
The price of cocoa on the London International Financial Futures and Options Exchange (LIFFE) reached GBP 1,105 for a March delivery yesterday, an increase of 0.27 per cent on the previous session. Year-on year, the price of cocoa traded on the LIFFE increased by 26.00 per cent.
The price of Robusta coffee on the London International Financial Futures and Options Exchange reached GBP 1,952 for a March delivery yesterday, an increase of 0.05 per cent on the previous session. Year-on-year, the price of Robusta coffee traded on the LIFFE increased by 20.49 per cent.
The price of Arabica coffee on the NYBOT reached USD132.25 for a March delivery yesterday, an increase of 0.65 per cent on the previous session. Year-on-year, the price of Arabica coffee traded on the NYBOT increased by 9.98 per cent.
Finally, the price of white sugar traded on the London International Financial Futures and Options Exchange reached GBP 327.50 for a March delivery yesterday, an increase of 0.55 per cent on the previous session. However, unlike the other commodities analysed by Business Today, year-on-year, the price of white sugar traded on the LIFFE decreased by 3.08 per cent.
Commodities comfortably outperformed global equities and bonds last year and pensions funds and asset managers are expected to increase their allocations to the asset class this year.
Market talk suggested that between USD 1 billion and USD 5 billion of new investment money could flow into commodities at the beginning of the new year.
The rise in the price of commodities has affected the price of food all across the board, with Eurostat figures based on the Harmonised Indices of Consumer Price (HICP) showing that the price of food in Malta rose from 104.66 in November 2006 to 112.83 in November last year, an increase of 8.17 points or 7.80 per cent on an annual basis.
The price of bread and cereals rose from 102.41 in November 2006 to 110.88 in November last year, an increase of 8.47 points or 8.27 per cent on an annual basis.
The price of milk, cheese and eggs rose from 101.41 in November 2006 to 111.37 in November last year, an increase of 9.96 points or 9.82 per cent on an annual basis.
The price of oils and fats rose from 109.42 in November 2006 to 115.61 in November last year, an increase of 6.19 points or 5.66 per cent on an annual basis.
The price of sugar, jam, honey, chocolate and confectionery rose from 103.21 in November 2006 to 105.58 in November last year, an increase of 2.37 points or 2.30 per cent on an annual basis.
Finally, the price of coffee, tea and cocoa rose from 104.99 in November 2006 to 107.21 in November last year, an increase of 2.22 points or 2.11 per cent on an annual basis.

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