Food prices expected to surge in 2011

Farm-commodity prices will extend rallies next year, driven by increased demand from emerging markets and higher energy costs, according to Netherlands-based Rabobank Groep.

There was “rampant demand” for agricultural commodities from China, and rising corn prices may drive gains in other grains, according to a report from analysts at the bank. Surging crude-oil costs, low global food stockpiles and a weakening dollar may also bolster prices, the report said.

Rabobank’s predictions add to forecasts that food costs may surge next year, potentially paving the way for a reprise of the bull market in 2008, when prices surged to records. Increased Chinese purchasing of global crops is “reshaping” some farm commodity markets, the report said.

“Corn will drive the grains complex” next year, with China importing as much as 8 million metric tons, the Rabobank report said. “We look for higher energy prices in 2011 to be a catalyst for higher agricultural prices.”

Corn and wheat futures have jumped more than 40 percent this year, while soybeans have rallied more than 25 percent.

“China’s corn demand for feed has now grown to represent nearly a quarter of the world’s total and we expect the robust growth to continue,” the Rabobank report said.

Corn imports into China may gain to a record next year and the country was working to start shipments from Argentina, the U.S. Grains Council said this month.

Demand from China for more foodstuffs from overseas may match the country’s recent increase in soybean purchases, the report said. Soybean imports, which totaled 10 million tons a decade ago, may reach 57 million tons in 2010-2011, the report said, citing a forecast from the U.S. Department of Agriculture.

“China now accounts for 60 percent of global soybean imports, in addition to approximately 20 percent of world-traded soybean oil,” the report said.

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