MercoPress. South Atlantic News Agency

Wheat prices soar on export restrictions and short supply

Wheat prices have hit a record level of 12 US dollars a bushel as supplies dwindle, raising concerns about growing food inflation. Investors fear that a shortage of high quality milling wheat will keep prices high for the cereal used in bread, pasta and other foods.

On Monday high-protein spring wheat on the Minneapolis Grain Exchange rose by almost 25% to record levels on Monday. Kazakhstan has become the latest country to put export restrictions on wheat as it battles against inflation. Russia and Argentina have already imposed similar export restrictions. The 25% rise in Minneapolis on Monday came after all trading restrictions were scrapped. The March futures contract closed at up 4.75 at 24 US dollars a bushel, the record price for any US wheat contract. The price of spring wheat has more than doubled since January. Reports of a drought in Northern China, where most of the country's wheat is grown, also pushed prices higher. Extreme weather has already damaged crops in other parts of the world and US wheat inventories are expected to fall to their lowest level for 60 years. The World Food Programme has warned that if it does not get more money, it will have to start cutting rations or reaching fewer people. The United Nations agency blamed rising prices for food and oil, as well as an increasing number of people who need its help. In addition to the supply problems pushing up prices, there has also been growing demand. Increasing wealth in China, for example, has led to consumers eating more meat, which means more grain is needed to feed farm animals. The higher wheat prices may not immediately affect US consumers since big food companies like Kellogg Co., General Mills Inc., and Kraft Foods Inc. typically protect themselves from price volatility with long-term supply contracts. But analysts say some consumers are already feeling the pinch â€" from smaller cereal boxes to having to ask for bread at restaurants â€" and should expect higher prices to eventually work their way into the grocery aisle.