Food prices to reach record high in 2011

The demand for meat, oilseeds and grain may drive global food prices to reach 4.4% to a record by the end of the year.

DMG Research said in a statement that the demand for ingredients used to make ethanol will push up prices even further, thereby accelerating inflation from the US to China.

According to US Department of Agriculture (USDA) estimates, global corn stockpiles are shrinking the most in
seven years and inventories of nine edible oils will drop to the lowest since 1974.

US beef stocks will be the smallest since 1999, the department noted.
The UN's food-price index, which covers 55 commodities, reached an all-time high of 236.8  points in February, before dropping by about 3 per cent last month. The next report is  scheduled for May 5.

Prices for meat, poultry and fish will jump 5 per cent to 6 per cent in 2011, led by beef, which may climb 8 per cent, and pork, which could gain 7.5 per cent, the USDA said in a report.

Consumers should get used to paying more because farmers will take years to expand production enough to meet demand, the International Monetary Fund said in a firstquarter report.

Costlier food contributed to riots across northern Africa and the Middle East that toppled leaders in Egypt and Tunisia.

44 million people were driven to poverty in the past year due to the unrest and another 10 million may join them should the UN index rise another 10 per cent, the World Bank  said on April 16.

DMG said that agriculture will remain a key investment theme tjis year on the backdrop of favourable global supply-demand dynamics.

The analyst has given a buy rating for agribusiness firms such as China Animal Healthcare, China Minzhong and Yamada Green.