London, 17 June 2011

The surge in food prices will take longer than expected to subside, primarily due to extreme weather conditions mostly in the EU and the US, according to Deutsche Bank Research.

Following a sharp decline in production in 2010, Deutsche expect global wheat output to rebound in 2011, but not enough to meet rising demand. A drop in wheat prices is therefore unlikely in 2011.

• Deutsche expect corn prices are expected to remain high in spite of high coarse grain production due to a tight supply and demand balance.

• Given low stocks of corn, wheat and soybeans, "price volatility should remain high".

• The upward trend in international oilseed prices eased in the last few months but is expected to resume. After reaching a 30-year high last January, sugar prices are adjusting down to increased production. Tight meat supplies are pushing prices up to new record levels."

High food prices will continue to significantly contribute to headline inflation, especially in emerging countries the bank says.

Ends --