The Food and Agriculture Organisation in Rome suggests upward pressure on cereal prices will continue, if only because not much more will be planted. This is partly because the US and Europe are switching hundreds of thousands of acres of land from food production to biofuels. According to the US department of agriculture, nearly 44% of US corn is now processed for fuel.
The key factor in many cereal prices is oil. Turmoil in oil-producing countries has pushed crude above $120 a barrel, which is expected to drive wheat and maize prices even higher. Higher crude prices make biofuels produced from crops more competitive while raising the cost of tractor fuel and fertiliser.
