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Crop prices 'poised for gains', says Monsanto, flagging need for yield growth

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Crop prices are poised for gains, Monsanto's Mac Marshall said, flagging that even after a series of bumper world harvests, inventories are closer to food crisis levels than to the gluts which pressed values to turn-of-the-century lows.

Mr Marshall, lead in strategic planning and communication at Monsanto, told Agrimoney LIVE that he was "long-term bullish on prices" of crops such as corn, soybeans and wheat.

"We will start to see some appreciation on the price side."

The forecast – which echoed a forecast on Wednesday to the conference from BlackRock commodities expert Skye Macpherson - reflected a pace of stockbuilding which appeared relatively weak, given that the world had enjoyed four successive strong harvests.

'Closer to crisis than glut'

Global inventories of storable commodities, such as grains, meat and oilseeds have recovered to the equivalent of 73-74 days' supply, well above the low of 58 days seen in 2008 which drove a spike in food prices.

Even so "we are a lot closer to the lows we saw when we had the food crisis that the real surplus we had at the turn of the century", when inventories rose to the equivalent to 93 days' consumption.

Food prices as measured by the United Nations Food and Agriculture Organisation (FAO) hit their record low in May 2002, on data going back to 1990.

The inventory rebuild is "more a temporary factor than a structural change. It is not a sea change", Mr Marshall told the conference, in London.

Need for investment

While "we have seen prices come down very significantly", higher values would prove beneficial for farming, in providing an incentive for measures to promote output needed to meet long-term demand growth.

"High prices are a good incentive for investment in agtech," Mr Marshall said.

Yield growth was paramount given that the area of global farmland will remain "restricted", and indeed decline to the equivalent of one-third of an acre person in 2050, from around one-half of an acre now, and 1 acre in 1961.

"We have to deliver more efficiency in each acre we farm."


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