MercoPress. South Atlantic News Agency

Limited supplies make wheat prices reach record highs

Wheat prices hit record highs this week. Bad weather in key grain growing areas such as Canada and parts of Europe has limited supplies as demand has risen, sparking fears of a supply shortfall and threats of rising bread prices.

While it will mean higher bread prices, it could also trigger an increase in meat and dairy prices as farmers' battle to pass on rising feed costs. Global wheat stockpiles will slip to their lowest levels in 26 years as a result, official US figures predicted earlier this month. The dire forecast came as Canadian officials said the country expected its harvest to be slashed by a fifth as a result of drought. Meanwhile Australia, the world's third-largest wheat exporter and a key supplier to Asian regions has also warned harvests may be reduced by warmer-than-expected temperatures experienced in the spring. Crops in the Black Sea area of Europe, however, have been ruined by bad weather, while Chinese production is expected to fall by 10% as a result of both flooding and droughts. And as supplies fall, demand from emerging economies such as India is increasing. This has helped push prices to record eleven years highs, 268 and 250 US dollars a ton on the benchmark Chicago Board of Trade and Kansas markets in the US on Thursday. In the United Kingdom, prices have also soared, with bread-making wheat now fetching about £200 per ton, double last year's level. But while surging prices are beneficial to wheat growers, they do bring further problems. A World Food Programme spokesman said the increases could mean its budget would not stretch far enough to help those affected by natural disasters on global commodities markets, bringing the threat of rising bread prices. The International Grains Council estimated the wheat world crop at 607 million tons which is 7 million below its latest estimate 614 million tons. The IGC estimate is even below the 610 million tons of the US Department of Agriculture. The EU crop according to the latest IGC report will reach 122.8 million tons, down from last month's 126.7 million. IGC world stockpiles for the 2007/08 crop are estimated in 111 million tons, down one million tons from last month and 6 million below 2006/07 stockpiles.