Food prices remain in the headlines. As we have previously reported, forward prices for corn and soybeans remain in the ascendant, but at least wheat prices haven't followed suit. The outlook for global production is mixed, so prices have staged something of a mini-rally, but industry analysts doubt whether this will stretch beyond the first quarter of next year.
Wheat contracts haven't appreciated to the same extent as either corn or soybeans, but the spectre of a partial export embargo pushing prices up has re-emerged after comments by Russia's economic development minister, Andrei Belousov. Mr Belousov said that if prices keep rising, Russia may curb grain shipments to ensure adequate domestic supplies. The comments were subsequently played down by other senior officials in Moscow, although Black Sea producers in Russia, Ukraine and Kazakhstan continue to struggle with inadequate levels of rainfall.
Meanwhile, a new report from Rabobank provided cheer for investors in the palm oil producers whose shares are traded in London. The Dutch agribank predicts a recovery in palm oil prices from their current lows as soon as it becomes obvious that soybean stocks have been drawn down beyond a critical level. The price forecast would have been welcomed by Asian Plantations (PALM), which this week announced an 18 per cent rise in its half-year operating loss to $2.82m (£1.74m), despite a 391 per cent increase in sales of fresh fruit bunches. The increase was at least partly attributable to a 13 per cent fall in realised prices over the corresponding 2011 half-year period. We retain our long-term buy recommendation on Asian Plantations.
