Purdue Economists Report on Causes of High Commodity Prices
by Keith Robinson (Purdue University) Growing demand for corn to use in biofuels and for soybeans to help feed a booming Chinese economy are among key forces driving commodity prices higher this year, according to a report by three Purdue agricultural economists.
A weak U.S. dollar, high oil prices, declining grain supplies and poor harvests in 2010 also contributed, they wrote in the report, which predicts that high prices will continue beyond the 2011 crop year.
The economists – Phil Abbott, Chris Hurt and Wally Tyner – detailed their findings in “What’s Driving Food Prices in 2011,” commissioned by Farm Foundation, NFP, and released Tuesday (July 19). Costs of commodities influence retail food prices as do general inflationary pressures such as transportation, packaging and food processing.
…”However, we also found that about 40 percent of the increase in Chinese soybean imports in recent years was due to increasing their inventories – building stocks,” Abbott said. “We believe they now have sufficient stocks levels, and that could slow their overall rate of growth of purchases in coming years.” READ MORE and MORE (Farm Foundation) Download Report