Grain Market Volatility to Continue

International Grains Council conference yields information about the near-term prospects for the market.

World grain prices should remain volatile for the next five years, according to a Rabobank analysis presented during the International Grains Council annual meeting in London. The Rabobank report notes that grain stocks have been drown down to  historically low levels due to rising biofuel demand, recent crop failures and animal feed growth, according to wire reports.

During the presentation, Rabobank's analyst told the annual meeting that grain prices are likely to remain high "in the absence of ideal growing conditions."

The analyst added that high prices and growing demand will drive up world grain production as well, which will eventually rebuild stocks. Global grain output has plenty of potential, according to the report.

Meanwhile, China reports that its cultivated area will drop to about 97 million hectares by 2015, which would be down fro 99 million in 2005. The country's population continues to rise and meat demand for the country will climb 40% by 2020. The rising demand for meat, while acreage declines, will put new pressures on China's agriculture.

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