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Mixed views on farmgate impact of stock market woes

Global oil markets are likely to keep food prices from rising much in the coming year, one expert has said


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Stock market volatility and falling oil prices could prevent food prices from rising much this year, experts have claimed.

 

As stock markets suffered significant volatility last week, analysts shared their views with Farmers Guardian on how global financial woes could affect food prices.

 

Jeremy Cook, chief economist at international payments company World First, claimed one of the main drivers to the current nature of financial markets was the significant falls in oil prices. He claimed a reduction in costs was hitting food price inflation and the cost benefits were not being felt by producers.

 

Mr Cook said: “Producers are having to pass on lower costs. They have taken a hit to margins and this is being passed to consumers.

 

“The main drivers [of recent financial volatility] are oil prices and uncertainty in China, as well as political risk and worries about the EU referendum. There is also the migrant crisis and the effect this is going to have on Government spending levels.”

 

Top UK shares fell to their lowest level in more than three years last Wednesday and markets have remained volatile this week.

 

Mr Cook admitted there may also be a hit to some aspects of consumer food spending due to uncertainty in financial markets.

 

“Food spending is not a discretionary spend, but the higher end of the market may take a hit,” he said. “People tend to cut back on the other end of things. They may cut back on eating out or buying a new TV.”

 

He also discussed uncertainty about emerging economies, including China, and suggested this often affected global trade.

 

Clive Black, head of research at Shore Capital stockbrokers, suggested the stock market issues were currently having a limited impact on farmers, claiming there was a ‘dotted line’ between finance industries and farms.

 

But he suggested the longer the volatility continued, the more it may spill over into affecting other markets.


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