(NEW YORK) Wheat rose above US$10 a bushel for the first time, leading other grains and oilseeds higher in a food price spiral that threatens to derail global economic growth.
Chicago wheat futures jumped as much as 30 cents, or 3.1 per cent, to US$10.095 a bushel as dry weather threatened crops in Argentina, renewing concern that the world’s farmers may not be able to grow enough to meet rising demand for bread, pasta and livestock feed.
Rice also advanced to a record, while soybeans gained to the highest in 34 years and corn to a nine-month peak.
Kellogg Co, the largest US cereal maker, General Mills Inc, Nissin Food Products Co and Kikkoman Corp are among companies that have raised prices.
‘We are seeing a broad-based increase in cost pressures,’ Brian Redican, senior economist at Macquarie Group Ltd, said in an interview from Sydney yesterday. ‘The increase in soft commodity prices is really the next stage in that process.’
The price of wheat has more than doubled in the past year as adverse weather reduced output from Australia to the US and Canada. Dry, warm weather may hurt yields in Argentina, the fourth-largest exporter, forecaster Meteorlogix LLC said on Dec 14.
‘Global supply is really tight at this time,’ Tobin Gorey, a commodity strategist at Commonwealth Bank of Australia, said by phone. ‘Saying there’s a near-term top in the price is a very dangerous thing to do.’
A smaller Argentine crop may reduce global wheat inventories that the US government says will drop 11 per cent by May 31 to 110.1 million metric tons.
Wheat for March delivery, the most-active contract, rose the exchange-imposed daily limit of 30 cents before trading at US$10.05 a bushel, up 2.6 per cent, in after-hours electronic trading on the Chicago Board of Trade on Friday.
Source: Bloomberg (Business Times 18 Dec 07)