Global food prices will set a new high impact on the livestock industry

The United States has experienced severe drought, and the weather conditions in Russia and South America are also very poor. Global grain and oilseed prices have continued to soar. The rising feed costs will have a great impact on the livestock industry.

The United States suffered from a drought that had never been seen since 1936. The weather conditions in Russia and South America were also very poor, resulting in severe water shortages. Global grain and oilseed prices have continued to soar. It is currently the third overall increase in global grain and oilseed prices in five years.

According to an agricultural commodity expert from the Rabobank Bank of the Netherlands, it is expected that global food prices will set record highs in the first quarter of next year. By June 2013, food prices tracked by the United Nations may have surged 15% from current levels.

The expert stated that “the next year, as food and oilseed stocks fall to the deadly low level, we will witness the global economy entering a period of agricultural inflation again, and the food price index of the Food and Agriculture Organization (FAO) will also More than the highest level ever achieved in February 2011."

For policy makers, the recurrence of food inflation also signals the arrival of trouble, because rising food prices may trigger social instability. Hermes fund manager said, "Politics and the economy are closely related, just like the Arab Spring, it is caused by soaring food prices."

However, Labo Bank stated that the impact on consumers this time may not be as great as it was in 2008, when serious shortages of wheat and rice were encountered. This time, the shortage of grain is mostly corn, soybean, etc., which mainly serve as animal food. However, this will indirectly lead to an increase in the price of livestock meat that is fed with corn, soybeans, and other crops.

At present, the food price levels of rice and wheat are 30% lower than those in 2008.

In addition, the background of rising food prices is that the slowdown in China’s demand and the debt problems in Western countries have ignited the prospects for economic growth. These factors will ease the price pressure within the system.

However, this does not mean that the risk has decreased. Labo Bank warned that the government's intervention measures may become a negative factor, and the "vicious circle" caused by the introduction of easing policies by central banks in various countries may worsen the food price environment.

The soaring food prices have already been reflected in pork prices. Global pig supplier Genus warns that rising feed costs next year will have a big impact on consumers. Some farmers have now begun to send animals to slaughterhouses in advance to save costs, which will lead to the next supply from the rise to the shortage.