November 19, 2010

China's inflation drives global agricultural markets

Moves to dampen food inflation in China should be seen as bullish for grain and oilseed markets, analysts said Thursday (Nov 18).

Commodities markets have tumbled after Beijing said it is prepared to take "forceful measures" to rein in inflation, including imposing price controls on staple goods and potentially raising interest rates.

But the move could herald a boon for agricultural markets as the Asian giant may be forced to import more supplies in order to stop further rises in food prices, according to experts.

This inflation-fighting policy can be seen as bullish for grain/oilseed import demand, analysts said, adding that one of the most effective ways to dampen domestic food inflation is to import more, not less.