Thursday, 5 August 2010

Wheat prices reach 22-month high

According to the BBC:

Wheat prices have hit a 22-month high after a severe drought and ensuing wildfires in Russia devastated crops.
Prices have risen 50% since late June.

Russia was the world's fourth largest wheat exporter in the 12 months to June behind the US, the EU and Canada, according to the US Department of Agriculture. And along with other former Soviet Republics such as Kazakhstan, it accounted for about 25% of the world's wheat exports last year, said Richard Feltes, senior vice president and director of commodity research at Chicago-based MF global. He added that while there was uncertainty over the volumes of crops being lost, such drastic change in production would severely cuts into global supply.

Of course, this isn't anything to do with peak oil, but rising oil and gas prices caused upward pressure on food prices a few years ago, through rising prices of fertilisers, pesticides and diesel, and also through competition for land from biofuel crops. With droughts and heat waves in various parts of the world there's that much less slack in the food system, and further rises in oil prices over the coming year could again increase food prices.


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