A surge in wheat prices caused by floods and drought in the Northern Hemisphere doesn’t constitute a “global crisis” and should spur more plantings to bolster supply, the Food and Agriculture Organization said.
Wheat traded in Chicago, a global benchmark, as much as doubled since June as drought in Russia, flooding in Canada and parched fields in Kazakhstan and the European Union ruined crops. Higher prices, combined with rallies in corn, rice and livestock, are increasing concern of a return to the food crisis of 2008 that sparked riots from Haiti to Egypt.
“The situation is very different from two years ago,” Abdolreza Abbassian, senior grains economist at the United Nations’ FAO in Rome, said in an interview on “The Pulse” with Andrea Catherwood. “We don’t want to undermine the importance of the wheat price rise in such a brief period of time. This is a concern in itself, but it is not something we consider at this stage to be of a global crisis status.”
While wheat prices have jumped, they’re still a long way off the peaks reached in 2008. Then, wheat reached a record $13.495 a bushel. It closed at $7.4125 on Sept. 3, having peaked about a month earlier at $8.68. It is “very unlikely” prices will return even to that peak, Abbassian said.
World wheat stockpiles are expected to be 174.8 million metric tons in the 2010-11 season, comprised of local marketing years, according to the U.S. Department of Agriculture. That’s 40 percent more than in 2007-08.
“The fact that we had inventories elsewhere and the major exporters such as the U.S. or EU could easily cover that shortfall is bringing some comfort to the market,” Abbassian said. “I think the worst is over.”