World Supply and Demand of Food Commodity Calories

prices more than tripled from roughly 2. 50 per bushel to nearly 8. 00 per bushel. Prices for rice, soybeans, and wheat rose by similar or greater amounts. The exceptionally large and unanticipated rise in prices was attributed to many factors, including: (a) ethanol subsidies, (b) commensurately rising oil prices, (c) unex-pectedly large demand growth from China and India, and (d) weather-related factors, such as drought in Australia. While some have ar-gued that the commodity price boom, much like earlier housing and stock market booms, were due to a speculative bubble, it is difficult to reconcile a bubble with an absence of in-ventory growth. Yet, inventories of all major commodities remained at historically low lev-els throughout the boom. Recently, prices have fallen precipitously due to a large inward shift in demand stemming from the global economic slowdown. Whatever the explanation or combination of explanations, recent commodity price swings suggest a reexamination of economic models of food commodities. High prices for staple grains can cause hunger, malnutrition, and civil conflict in developing nations. It is therefore important for policy makers to know the extent