Once again there is concern about wheat prices being overstated, even with the Russians fires and the extended export ban, so what has been causing prices to rise? Like when oil prices hit US$147/barrel on 18th July 2008 (today US$73) analysts are suggesting that investors are to blame. They are buying wheat on world commodity markets in the anticipation that prices will rise further and are thus overriding the fundamentals of supply and demand. The fact is, the world market remains very well supplied with wheat.
However if this price rise in wheat is due to the Russian fires and its exports ban, one should be aware of the long-term picture for prices – overall global food prices have risen by an average 83% in the past 10 years, according to the Food & Agriculture Organisation of the United Nations. The United Nations’ food agency has called a special meeting of policy makers to discuss the recent rise in global food prices – click here for further information from the BBC. The photo shows traders in the wheat pit at the Chicago Board of Trade Exchange.