Fall in the price of grain but how will that be translated to the price for food
Tuesday, 08 October 2013
Improved harvest means that grain prices has had to fall. Over time, this should mean lower food prices but here in Sweden it will take some time for that to be realised.
Grain prices are crucial for the price of products such as such milk, bread, pasta, and meat. In one year, global wheat prices have fallen by nearly 25 percent and corn prices by almost 30 percent.
Such falls are supposed to be greeted with applause by consumers and suppliers. But so far in Sweden, the falling grain prices has had no effect on the Swedish food prices. Just like patrol, no one is willing to pass the falling prices to the hard pressed consumers.
Thomas Svaton, CEO of Swedish Retail Association, believes it may take up to a year for such a thing where lower prices could be passed to the consumers
"Because there are futures contracts in various stages. And depending partly on how inventory levels look around the world, and how contracts look at the individual players levels, it is hard to see price either increase or decrease in consumer prices levels," he says.
"Conditions in Sweden that can affect price falls are probably quite small. Partly as a result of the fact that that we have a very few players that dominate the retail and wholesale levels. So from that perspective, we can not be fully effective," says Jörgen Kennemar commodity analyst at Swedbank.
While grain prices have fallen from historically high levels, it is also affecting the top agenda of the UN food organization, FAO, which yesterday had a gathering of several of the world's agriculture ministers. The meeting concluded that the pricing right now favours the poor, but that it will swing.
Analysts agree that, looking into the future, price rise is eminent, and also that there are possibilities of increased price volatility as the world population expand.
by Scancomark.com Team