Monday December 17, 2007

Wheat price rises above $10 for first time on supply concerns

bloomberg.com :

Wheat rose above $10 a bushel for the first time and soybean and corn prices surged, fueling inflation that's threatening to derail global growth. Chicago wheat futures jumped by the exchange-imposed daily limit to $10.095 a bushel as dry weather threatened crops in Argentina, renewing concern that farmers may fail to supply enough to meet rising demand. Soybeans advanced to $11.9225 a bushel, the highest in 34 years, and corn rose to $4.4325 a bushel, a nine-month peak.

Food companies such as Kellogg and General Mills have raised prices because of higher wheat costs, which are stoking inflation and making it more difficult for the world's central bankers to lower interest rates. Sara Lee said Dec. 13 [2007] it will increase bread prices for a second time since September to counter higher input costs.

Wheat for March delivery, the most-active contract, traded at $10.07 a bushel in after-hours electronic trading on the Chicago Board of Trade at 2:09 p.m. Sydney time. The price has more than doubled in the past year as adverse weather reduced output from Australia to the U.S. and Canada. Soybean futures for March delivery rose as much as 17.25 cents to $11.9225 a bushel on the Chicago Board of Trade. Prices have gained 73% this year after U.S. farmers planted the fewest acres in 12 years in favor of corn.

U.S. consumer prices rose the most in more than two years last month, reinforcing the Federal Reserve's concern that inflation will erode confidence in the economy. The consumer price index increased 0.8% in November, up from 0.3% the previous month, the Labor Department said Dec. 14. Inflation in Europe last month rose at its fastest annual pace since May 2001, increasing by 3.1% as food costs soared.

- Let's digest this a bit. Wheat hits $10. That's a nice psychological level, something like $100 oil, which we haven't quite reached - yet. Bread prices going up again. Soybeans hit 34-year highs, yeow. Even the heavily tweaked and suppressed CPI and core inflation rates are edging up. We're having fun, aren't we?

See also :

1. Bread and inflation
2. Why food costs more
3. End of cheap food era - bad news for poor
4. Get ready for Peak Grain
5. World grain stocks fall to 57 days of consumption

(2007-12-17 12:38:36 SGT) [Biz] Permalink

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