Global Themes - Risks From Higher Food Prices
We have assessed the potential for higher global food prices in 2014, and our core view is that they should remain relatively well contained. However, though we expect grain prices to average lower in 2014 than they did in 2013, there are some significant upside risks to prices, ranging from weather factors to trade disruptions.
This is a key global risk, since food price spikes have played a role in some of the most significant emerging market crises of the past several years. These include the 2007-08 inflation scare, which gave rise to tighter monetary policy just as the floor fell from under the global economy, and the 2010-11 Arab Spring uprisings in the Middle East and North Africa.
Similar factors may come into play in emerging markets this time around, should food prices surprise to the upside. Emerging markets with high food weightings in their consumer price baskets would be particularly vulnerable.
|A Return To 2010 Unlikely|
|S&P GSCI Grains Index & % chg y-o-y|