Global Commodities Forecast Indicates Potential Supply Problem and Higher Prices

The U.S. Department of Agriculture  2020 agricultural projections reveal total global grain use increased by approximately 1.5 percent between 2009-2010 and is projected to grow a little over 1.6 percent  from 2010-2011. The Total global supply of grain is forecast to grow near 1.5 percent between 2010-2011 and dropped around .06 percent between 2009-2010.

Total World grain supply and consumption

Source: U.S. Department of Agriculture

If the global population is increasing at a rate of around one percent each year according to the USDA and U.S, then for each one percent of growth in global population use of grain increases closer to 1.5 percent.

Global Population Growth
Source: U.S. Census, USDA 

So two questions to ask are what is the global capacity to support total global grain production and if this same supply and demand trend continue what will happen to grain prices. On the latter, it appears as though grain prices will rise based on the above data as the rate of supply growth is lower than the use growth rate.

The first question is harder to answer; an ABC news report citing the head of Australia's Science Agency highlights key variables. Specifically, on the one hand global warming, increasing urbanization and population put pressure on the food supply, but on the hand human have a knack for innovation that allowed the population to get as high as it is. 

Either way, the ABC report states all the food produced in human history will amount to the same or a similar amount that will be needed in the next five decades. This is a scenario that is likely to put a pressure on food production and food price inflation that may not have even been experienced in history.