Tuesday, February 26, 2008

The Price of Bread Will Rise

Or at least the price of wheat has gone up in a worrying way:

Wheat prices have hit record levels as supplies dwindle, raising concerns about growing food inflation.

Chicago Board of Trade (CBOT) wheat for delivery in March rose the maximum 90 cents allowed to $11.99 a bushel in electronic trading in Asia.

High-protein spring wheat on the Minneapolis Grain Exchange rose by almost 25% to record levels on Monday.

Kazakhstan has become the latest country to put export restrictions on wheat as it battles against inflation.

Russia and Argentina have already imposed similar export restrictions.

What's behind this? Partly poor harvests in the recent past, partly the rising standard of living in China (and India) which has increased the demand for meat. Meat takes a lot of wheat to grow.

Note that other agricultural staples might face similar price increases in the future.