ASEAN KEY DESTINATIONS
Dynamics shift leads commodities rise
Major structural changes in the dynamics of the global commodities scene have propelled world commodities to staggering record prices.
Crude oil, gold, coal, iron ore, copper, soybean and wheat closed on a firm note last year registering price increases of between 30% and 50% but tin and rubber are charting new highs week after week.
As of yesterday, crude oil had risen 16 percent to US$85, gold 20 percent (US$1,310), copper 37 percent (US$9,440), soybean 48 percent (US$1,390) and 45 percent wheat (US$839) Over the past decade, there have been significant merger and acquisitions as well as consolidation among world steel giants, iron ore mining and fertilizer companies thus creating mammoth entities which controlled the world's mineral-based commodities.
The green fuel hype in mid-2000 also saw major food-based agriculture crops such as soybean, wheat and sunflower being replaced by corn for the production of bio-ethanol.
This had triggered a debate among world leaders, economists and NGOs on whether food crops should be shared to generate bio-diesel.
Global food security is in a dire situation as exceedingly high crude oil and natural gas prices had increased the cost of production. This in turn translates into higher demand for bio-fuels. Food prices have been on the rise over the last 10 years. Rice, soybean and corn prices have reached record highs and the increasing cost of grains has led to more expensive meat, poultry, eggs and dairy products.
Strong demand from China and India have also put pressure on the prices of food commodities worldwide.
Exacerbating the situation is the unpredictable global weather which had been wreaking havoc on the production of agricultural crops.
According to the latest United Nation's Food and Agriculture Organisation and the Organisation for Economic Co-operation and Development Agriculture report, food prices would increase in the next 10 years.
"The global economic recovery, rising world population and the rapid growth in the emerging economies will also increase both the demand and trade of food commodities."
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