  Increases in global food prices have led to widespread hunger and social
unrest---and an imperative to understand their causes. In a previous paper
published in September 2011, we constructed for the first time a dynamic model
that quantitatively agreed with food prices. Specifically, the model fit the
FAO Food Price Index time series from January 2004 to March 2011, inclusive.
The results showed that the dominant causes of price increases during this
period were investor speculation and ethanol conversion. The model included
investor trend following as well as shifting between commodities, equities and
bonds to take advantage of increased expected returns. Here, we extend the food
prices model to January 2012, without modifying the model but simply continuing
its dynamics. The agreement is still precise, validating both the descriptive
and predictive abilities of the analysis. Policy actions are needed to avoid a
third speculative bubble that would cause prices to rise above recent peaks by
the end of 2012.
