Financial Times, London,12/20/2001 : Prices of some soft commodities areabout to take off, according to the Economist Intelligence Unit (EIU). TheLondon-based research unit predicts double-digit increases in the price ofgrains and oilseeds next year and in 2003.

"The first half of 2002 will be the worst for the global economy, before arecovery in many countries in the second half, leading to a stronger 2003,when world growth will recover to 4.2 per cent," said the EIU. It thinksgrowth will average 2.7 per cent next year.

Declining stocks - of wheat in particular - are expected to push grainprices up by 11.5 per cent next year, followed by a 21.9 per cent leap in2003.

Oilseed prices are forecast to rise as demand improves and supply growthlags. "Sunflowerseed and rapeseed oil prices will lead the recovery . . .driving the price of substitute oil - soybean oil - much higher," said theEIU. Oilseed prices are expected to shoot up by almost 22 per cent nextyear. This would be their first annual rise for five years.

The boom is not expected to extend to beverages, however. Cocoa prices areexpected to rise modestly over the next two years, but tea prices willcontinue to fall. Average coffee prices are expected to follow this year's30 per cent crash, with a fall of another 15 per cent next year.

"Prices will continue to decline through to 2003, as exceptionallystubborn producers refuse to take the sensible action of curtailingoutput," said the EIU. "Although prices could eventually rally in early2004, any recovery will be restrained by the large stock build that themassively oversupplied market has allowed."

<>