Food inflation doesn't look like it's going to ease anytime soon. Severe drought across China is pushing up grain prices with the bulk purchase price of corn increasing by up to 10 percent.
The upward trend is expected to continue, given the dry spell in grain producing regions has strengthened market expectations of a reduction in output. Importing grain isn't as easy option either.
A number of producing countries have limited wheat exports. Excessive liquidity worldwide is also expected to increase inflationary pressure on farm produce.
Trading the Food Crisis
The United Nations Food and Agricultural Organisation said record food prices in December were 25 per cent higher than a year earlier.
The warning follows a key world Food Price Index reaching a record 215 points in December, up 4 per cent from November and one point above its previous record during the food crisis in 2008.
Meat and Livestock Australia chief economist Tim McRae said demand was growing steadily for lamb, beef, pork and chicken as the world economy recovered after the Global Financial Crisis.
Here are the must own stocks as Food Prices keep rising
Olam International, Noble Group, Wilmar International
Singapore listed commodities companies are set to become the rising stars of the exchange in 2011 and will become global players of significant importance.
Olam International Ltd, Wilmar International Ltd and Noble Group Ltd are most likely to lead the charge as the benefit from home grown markets in ASEAN, China and India, where the world's largest populations are consuming more and more of the world's food supply.
Cash Flow is on the rise at Noble and Olam, both have successfully made the switch into production from trading, have been expanding ever since.
Olam is the world's largest supplier of cashews and sesame seeds, and is among the biggest sources of cocoa, rice, peanuts and cotton. It operates in 64 countries.
Noble is Asia's biggest supplier of raw materials. Only 22 percent of its revenue comes from agriculture, with the remainder coming from materials such as iron ore.
It has invested heavily in mines and processing.
Wilmar is Asia's leading agribusiness group and the world's largest integrated palm oil company.
Golden Agri-Resources Ltd is the world's second largest palm oil plantation with a total planted area of 435,000 hectares (including small holders) as at 30 September 2010, located in Indonesia. It has integrated operations focused on the production of palm-based edible oil and fat products.
Demand is expected to grow because of demand for biofuels, which is part of the reason the company bought the sugar and renewable energy businesses from Australia's CSR.