Goldman Sachs: Food reserves as percentage of consumption
Food commodities have been a difficult sector to figure out, as there are a lot of conflicting element involved in the overall equation, and it'll take time to sort it all out. Goldman Sachs (NYSE:GS) says global food commodities, while having record ending stocks this year for some of them, when taken together as a percent of consumption, drops by 17 percent.
While most of us understand the population growth which will generate more food demand, there is also the supply side, which in many cases has created the record ending stock because of so many countries growing major crops for their own people and exports. That has put and kept downward pressure on food prices for a while now.
We'll know if and when food demand outpaces supply, as the prices of food will respond almost immediately.
When taking into account the 30-year average for reserves as a percentage of consumption, which is 27.7 percent, you can see there could be the possibility of a surge in food prices.
There's no way to no the bottom of course, but we're down in the major food commodities and there isn't a lot of room more to go.
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