Over the past few years, emerging market economies have increased demand for many of these commodities, and world supply has not kept pace with this growing demand. For oil, non-OPEC production, particularly in the North Sea and in Mexico, has proved disappointing, and OPEC production has remained restrained. As for food prices, bad weather has combined with higher production costs to restrain supplies.
Consequently, agricultural inventories have been drawn down to low levels and have not been available to absorb the rising demand. Furthermore, higher energy prices have affected agricultural prices not only through higher costs of production but also by boosting the demand for biofuels.