Emerging Markets Driving Commodity Prices Increase In 2011

by Dan Harrington on April 2, 2011

Commodity Prices Rising in 2011 – China Leads Emerging Economies In Creating Huge New Demand

World Commodity Market Report 2011 – Cotton prices recently rose to a record high of $2.27 per pound – the highest price since records began being kept 140 years ago – before backing off a bit.

Emerging Markets Driving Strong Demand For Commodities

Like other commodities the demand is being driven by emerging markets including China, disappointing harvests, and lower than expected planted March planted acreage in the U.S. though Pakistan (the fourth largest cotton grower in the world) forecasted a 36% increase in output in the coming year beginning July 1, 2011.

Meanwhile the U.S. Dept. of Agriculture lowered its forecast for U.S. cotton production after a year in which exports increased 48% from the previous year.

Cotton Spirals Upward In Price On Strong Demand – China Leads Emerging Markets

China’s demand for cotton rose 86% in 2010 from the previous year. Along with China, other emerging markets including Latin AmericaBrazil, Russia and India – have growing middle classes that are driving demand for many products from coffee to oil.

Brazil, India, and Latin America are creating huge new demand for a broad range of commodities helping to drive up prices.

World Cotton Supply Outpaced By Demand

Some industry analysts have forecasted that the world supply of cotton will not be able to meet the demand, and in particular the demand being created by China. This comes at a time of depleted world stockpiles making the market prices more vulnerable to any new supply disruptions.

Emerging Markets Driving Commodity Prices Increase In 2011 continued:

Good News and Bad News In World Sugar Markets – Commodity Prices Rising 2011

India has predicted increased sugar exports and India, the world’s second largest sugar exporter, has said it will be able to increase exports if the weather cooperates, and may set a new record.

However Brazil sugar exports are predicted to be down, and a twenty-one percent decrease is expected from Australia which is the world’s 3rd largest exporter of sugar, but faces concerns over cyclones and floods.

The loss of sugar cane plants also makes it likely that Australia will be reducing their output for up to three years. Worldwide demand for sugar is expected to increase 1.7% with world stocks versus consumption is at a twenty-year low.

Coffee Prices Face Arabica Shortage and Strong Emerging Market Demand

Coffee prices have paused momentarily in their steady rise during the last six months with prices doubling over the last year.

Though global January green coffee beans (unroasted coffee beans) exports rose 16% from the previous year, according to the International Coffee Organization, though stockpiles are at a 40-year low and coffee plant diseases and pests due along with inclement weather in coffee growing regions have lowered forecasts for near-term coffee harvests.

The Arabica coffee bean production of powerhouse grower Brazil is predicted to decrease thirteen percent in the year beginning July 1, 2011.

Commodity Prices Increase In 2011 – Emerging Markets Driving Demand and China Leads the Way

Sugar Prices Face Upward Pressures Amid Strong Demand

Recently the U.S. Department of Agriculture predicted that the U.S. will have its second largest sugar crop since World War II. However, even if the bumper crop comes to fruition it is unlikely to keep sugar prices from rising due to growing demand and concerns with other major world  sugar producers.

High prices have incentivized corn farmers and total planted acreage this year is expected to grow about 4.5% totaling 92.2 million acres. The current crop year ends on August 31, 2011. Weather always remains a concern and speculative traders in sugar markets are maintaining high prices knowing also that the low world stockpiles create a tenuous situation.

Low Corn Stocks Create Tight Supply Chain Vulnerable To Weather – Strong Demand for Multi-Use Product

Corn prices stockpiles have also been depleted in the last year. In the U.S. stored corn decreased 15% and prices are at a 2.5 year high. Stocks are expected to drop to a fifteen-year low.

Traders remain wary with corn also, knowing there are strong pressures being created by the availability of arable land a high likelihood of inclement weather significantly affecting yields.

Many industry analysts have predicted that corn will soon exceed its all-time high ($7.65 a bushel), perhaps reaching $9 per bushel.

China’s increasing demand for corn has recently caused major concerns in the market driving up futures prices. Corn’s use in biofuels and for animal feed as well as human food make it highly in demand.

High Oil Prices Raise Commodity Price Across the Board

Meanwhile oil prices have continued their steady rise which is creating higher prices for all of the commodities across the board due to increased shipping and production costs.

Unrest in the Middle East and North Africa along with rising demand from emerging markets continues to put upward pressure on oil prices.

Thanks for Visiting Gourmet Coffee Lovers and Reading Emerging Markets Driving Commodity Prices Increase In 2011. Love Your Coffee and Espresso!

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