Wheat hits record $11.53 on supply concerns

Wheat futures briefly jumped to a new record above $11 a bushel Monday [11 Feb 2008] on expectations of tight global supplies that could lead to higher prices for bread, pasta and other food. Wheat prices have surged 20% since the start of year, pushed higher by growing world demand and bad weather that has pummeled crops in Canada, Argentina and India. U.S. exporters are selling wheat at a record pace to meet demand, rapidly depleting stockpiles. Wheat for March delivery jumped the newly imposed 60-cent limit to fetch an all-time high of $11.53 a bushel in electronic trading on the Chicago Board of Trade. "It's an unprecedented move in wheat markets," said Jason Ward, analyst with Northstar Commodity in Minneapolis.

Relentless demand for agricultural products from fast-growing countries including China and India has exacerbated the supply crunch. Though many big food companies protect themselves against volatile prices swings, experts say U.S. consumers should expect higher food prices to eventually work their way into the grocery aisle. "It's going to affect everything - pasta, bread, cereal. It's a big deal," Ward said.

- Inflation is taking off and going exponential. Everyone needs to eat, so you could say demand for food-related commodities should be relatively price-inelastic. I am looking to hedge myself against food price inflation via investing into agricultural commodities and agriculture-related companies, and perhaps you might want to consider doing the same too.

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