"Foods are at record prices" says the UN (Fullermoney 3Mar), but this doesn't seem to fit with the charts. The only food commodity which I know is well above the 2008 high is coffee. As far as I am aware, none of the grains are at record highs. Sugar is, but only just, whereas the UN sugar index shows more than doubling since 2008. The meats index shown in your chart library has halved since 2005. Can you make any sense of these conflicting data? Your comments would be appreciated."

Eoin Treacy's view Thank you for this question which other subscribers may also have an interest in. As you will see from the link you provide the UN article refers to an amalgam of five different commodity price indices. These are for Cereals, Dairy, Oils/Fats, Meat and Sugar. You are correct that grain prices have not surmounted their 2008 peaks. Milk is currently rallying towards the upper side of a lengthy range. Palm Oil retested the 2008 peak and soybean oil has so far come close to doing the same. I'm not sure which meat index in the Chart Library you are referring to but Feeder Cattle and Live Cattle prices have hit new multi decade peaks this year. Sugar broke above its 2008 peak in early 2009 and as of today is trading at more than double that level. It is marginally above its 2010 peak which may have been a cause of confusion. On aggregate I suspect the claim that a basket of food prices hit a new high is probably correct.

As David pointed out yesterday, the risk of reversion toward the mean is increasing. The response to the earthquake in Japan has increased volatility across asset classes but this does not negate the increased potential for mean reversion.