Forget oil, look at food prices

Oil has been such an economic bogeyman in recent times, hogging the headlines, that not noticed is as severe a threat — food inflation.

Food staple maize has been trading internationally at record highs, driven by the world’s move to energy diversification to produce bio-fuels as an alternative to fossil fuels.
Kirsten said grain prices had increased after record low prices in the previous season caused farmers to plant less grain for this year’s harvest.

“I forecast that food inflation will probably do 7% to 8% for the next couple of months,” he said, adding that it depended on the weather over the next three months. He said there is a “high intention” among farmers to plant and seed sales were up recently.

Futures trader Rudi Swanepoel said world demand for grain was high because of increased efforts overseas to produce bio-diesel and ethanol.

The world maize supply is at a 30-year low, he said, which contributed to high domestic prices along with the weakened currency. He predicted that domestic grain prices would stay high for the next two to four years.

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