Wheat prices are the highest since the food crisis in 2008
06 August 2010
Wheat prices have hit a two year high. Prices are again climbing steeply for wheat and, despite claims by some analysts in the media, there is plenty of wheat available and talk of global shortages is unfounded.
The last time prices were higher, there was a food crisis and people were going hungry across the developing world, whilst in the US and UK people were paying more for their weekly shop.
Whilst drought, fire and flooding have reduced Russia and Canada's wheat harvest respectively, there is a bumper yield in the United States and global wheat stocks are high. So if the price were based on supply and demand for wheat itself, the price would not be rocketing in the way that it has over the last month. According to Jonathan Barratt, managing director at Commodity Broking Services in Sydney “There are two things driving the market, fear and fund buying.”
Those funds are the same speculators which caused food prices to go so high in 2008, and have sent coffee and cocoa prices all over the place in recent months. Now they are once again pushing up the price of one of the world’s staple foods. It has been reported that speculators bought an unusually high number of wheat contracts in recent weeks.
Some producers of biscuits and bread have said that prices may go up. This will leave people in the UK out of pocket, but in the developing world, it may lead to starvation. Excessive speculation is immoral and the banks who are gambling on hunger needs to be regulated in the US and Europe immediately.