Agricultural commodity prices are headed higher next year as the global economy recovers from recession, experts say.
For example, a Bloomberg survey of exporters, importers and analysts indicates that rice prices will jump 63 percent next year.
JPMorgan Chase predicts sugar prices will rise 25 percent, and the U.S. government forecasts milk prices will gain 39 percent.
“Agricultural commodities will be a great investment in the next three to five years,” Oliver Kratz, head of global thematic strategy investments at Deutsche Bank’s DB Advisors, tells Bloomberg.
That’s good news for commodity investors, but bad news for poor people, who face hunger risks, Kratz points out.
Already global food prices soared 7 percent in November, the biggest gain since February 2008, according to the UN Food and Agriculture Organization. Agricultural prices hit record highs in June 2008.
“Inventories are extremely low in a number of grains markets,” Barclays Capital wrote in a report to customers.
“The prospect of a further bout of food-price inflation in 2010 cannot be ruled out since many of the factors that contributed to higher prices in 2007 and 2008 are still a feature.”
The most prominent bull on agricultural prices is legendary investor Jim Rogers.
“I'm not buying anything now, but if I am buying, I'll be buying agriculture, silver, natural gas, palladium and all things that are very depressed," he said at a recent conference.
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