Major agric commodities like wheat, rice, corn and coffee are all set to enter the New Year on the back of record prices.
Analysts attributed the surge to variety of factors from combination of weather damage to crops across the world to export bans in countries such as Russia.
While crop prices had a bit of pull back in early November due to Chinese demand concerns, the cold winter expected from "La Nina" has fueled speculation that even southern hemisphere crops may struggle, and once again sent prices up.
Analysts are worried that hot and dry weather in the southern hemisphere is endangering the next wheat crop.
Another reason analysts find out for price hikes is the growing demand for meat in China and other emerging markets. That's driven up grain prices, which in turn boost the cost of chicken, steak, bread and pasta.
Grain prices also have been hiked due to a drought in Russia, planting problems around the world and speculative trading.
Meanwhile, coffee production shortfalls in Latin America have recently caused notable coffee chains to pass increased costs onto the consumer.
During Starbucks' fiscal fourth quarter earnings call the company warned that commodity costs are now expected to have an unfavorable impact on EPS of approximately $0.08 to $0.10, attributable primarily to higher coffee costs.
The next harvest in Australia and Argentina, representing about 23 per cent of global wheat exports is nearing as traders say a good crop is essential to replenish global wheat inventories, which have fallen to their lowest levels since 1979.
However, prospects are deteriorating despite a good seeding start. Australia and Argentina have suffered weather setbacks.
Wheat edged higher after rainstorms hit parts of Australia. Some are questioning if the bad weather reduced the amount of crop that will be available for human consumption.
Cool, wet conditions during this time extend the growing season and allow for maximum production. However, hot and dry conditions effectively cut the growing season short, greatly reducing the crop.
Some commodities benefited amid concerns that financial problems could spread to other European countries after a bailout plan was approved for Ireland.
Most energy products settled higher as traders monitored ongoing tensions between North Korea and South Korea.
Some analysts also blamed commodity index speculators for playing a big role in increase in commodity
prices.
Though Speculators have indeed sharply increased their allocation to commodity markets from $13 billion in 2003 to $400 billion in 2010 and at present they are not adequately constrained by rules about margin requirements and other regulations about buying and selling which apply to equity trades.
In fact, there has been further deregulation in the US in recent years with respect to speculative futures trading in oil and commodity indices covering a wide spectrum of commodities including food and metals.
Analysts attributed the surge to variety of factors from combination of weather damage to crops across the world to export bans in countries such as Russia.
While crop prices had a bit of pull back in early November due to Chinese demand concerns, the cold winter expected from "La Nina" has fueled speculation that even southern hemisphere crops may struggle, and once again sent prices up.
Analysts are worried that hot and dry weather in the southern hemisphere is endangering the next wheat crop.
Another reason analysts find out for price hikes is the growing demand for meat in China and other emerging markets. That's driven up grain prices, which in turn boost the cost of chicken, steak, bread and pasta.
Grain prices also have been hiked due to a drought in Russia, planting problems around the world and speculative trading.
Meanwhile, coffee production shortfalls in Latin America have recently caused notable coffee chains to pass increased costs onto the consumer.
During Starbucks' fiscal fourth quarter earnings call the company warned that commodity costs are now expected to have an unfavorable impact on EPS of approximately $0.08 to $0.10, attributable primarily to higher coffee costs.
The next harvest in Australia and Argentina, representing about 23 per cent of global wheat exports is nearing as traders say a good crop is essential to replenish global wheat inventories, which have fallen to their lowest levels since 1979.
However, prospects are deteriorating despite a good seeding start. Australia and Argentina have suffered weather setbacks.
Wheat edged higher after rainstorms hit parts of Australia. Some are questioning if the bad weather reduced the amount of crop that will be available for human consumption.
Cool, wet conditions during this time extend the growing season and allow for maximum production. However, hot and dry conditions effectively cut the growing season short, greatly reducing the crop.
Some commodities benefited amid concerns that financial problems could spread to other European countries after a bailout plan was approved for Ireland.
Most energy products settled higher as traders monitored ongoing tensions between North Korea and South Korea.
Some analysts also blamed commodity index speculators for playing a big role in increase in commodity
prices.
Though Speculators have indeed sharply increased their allocation to commodity markets from $13 billion in 2003 to $400 billion in 2010 and at present they are not adequately constrained by rules about margin requirements and other regulations about buying and selling which apply to equity trades.
In fact, there has been further deregulation in the US in recent years with respect to speculative futures trading in oil and commodity indices covering a wide spectrum of commodities including food and metals.
