FAO expects a tightening of the global cereal supply and demand balance in 2010/11. In the face of a growing demand and a decline in world cereal production in 2010, global cereal stocks this year are expected to fall sharply because of a decline in inventories of wheat and coarse grains. International cereal prices have increased sharply with export prices of major grains up at least 70 percent from February last year.
“Unexpected oil price spikes could further exacerbate an already precarious situation in food markets,” said David Hallam, Director of FAO’s Trade and Market Division.
“This adds even more uncertainty concerning the price outlook just as plantings for crops in some of the major growing regions are about to start,” he added.
Unless oil prices come down sharply and soon, it’s likely to get worse before it gets better.
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