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Suresh P. Iyengar

Mumbai, Dec 7 In what could be termed as “agflation”, agriculture commodity prices globally have risen more steeply than metals in 2007, according to a NCDEX report quoting World Bank data.

Wheat topped the list with an average gain of 44 per cent to $229 per tonne between January and November 2007 against the average price of $159 per tonne last year.

Early September, the world wheat price rose to over $400 a tonne, the highest ever recorded. In May it had been around $200. Though in real terms its price is far below the heights it scaled in 1974, it is still twice the average of the past 25 years.

Soyabean oil has risen 43 per cent to $856 per tonne in first 11 months of 2007 against $598 per tonne in 2006. Soybean meal rose 41 per cent to $296 per tonne up to Nov against $209 last year.

Global maize prices have jumped 33 per cent to $162 per tonne against $121 per tonne last year.

Maize prices this year hit a world record at $175 a tonnes.

“Harvests in 2007, have been poor in many countries, especially in Australia, where the drought-hit wheat crop failed for the second year running. And world cereals stocks as a proportion of production are the lowest ever recorded,” said Mr Sushil Sinha, regional head, Karvy Commodities.

The diversion of maize, mainly in America (the world’s largest maize exporter) for ethanol production has also added fuel to the fire. “In 2000 around 15 million tonnes of America’s maize crop was turned into ethanol; this year the quantity is likely to be around 85 million tonnes. America is easily the world’s largest maize exporter—and it now uses more of its maize crop for ethanol than it sells abroad,” said Mr Sinha.

Groundnut oil, which witnessed a fall of 8.5 per cent in 2006, hit the roof by gaining 35 per cent to $1,312 per tonne ($970 a tonne) in 2007.

Interestingly, while sugar prices dropped 32 per cent to $22 a kg ($32/kg), coffee robusta rose 27 per cent to $190 ($148) in 2007.

“Lead prices almost doubled to 257 cents per kg (129 c/kg) in 2007, while tin prices jumped 64 per cent to 1,438 c/kg (878 c/kg) this year. However, lead prices have dropped 10 per cent in November. Similarly, copper (13 per cent), zinc (14 per cent) and nickel (1.4 per cent) have moved down due to fall in demand,” the NCDEX report said.

Interestingly, rise in gold prices have slowed down 14 per cent to $687 a toz ($604 a toz) in 2007, against a gain of 36 per cent logged in last year.

More Stories on : Commodity Markets | Metals

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