Friday, May 16, 2008

Global Food Prices Down in April

World food prices fell in April for the first time in 15 months, according to figures from the United Nations Food and Agriculture Organisation (FAO).

Its food price index fell to 216.7 from 217.0 in March, having surged from last April's figure of 141.7.


Mr Segal pointed to factors such as population growth still outstripping food production, increased affluence pushing up meat consumption, and the use of grain for biofuels.

Who knows what happens month to month but it did break a 15 month winning streak. When it comes to inflation in the U.S. you see in the grocery store there would need to be a very large drop in grain commodities before you saw a slowdown in price increases. First everyone is still playing catch up. Secondly, and more importantly, most of the large food producers are substantially hedged 1 to 2 years out. So companies like Kraft input prices are still at much lower prices (I am assuming this with Kraft, I have not actually studied this particular company) than those same input prices would be if they bought in the spot market.

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