There has already been a national day of protest whereby Italians didn't eat pasta. They could alwyas go for two this time but I suspect hunger may get the better of them ... this bull market cannot be avoided.
----------------------------------------------------------- Italian Pasta to Soar on Record Wheat Costs, Grandi Molini Says
By Marianne Stigset
Feb. 26 () -- The price of pasta in Italy, the world's biggest consumer of the food, is set to soar as wheat climbs to records, the chief executive officer of the nation's largest flour miller said.
``Agflation in products such as pasta needs to correspond to the underlying commodity and the price of durum wheat has more than tripled in the past couple of months,'' Antonio Costato said today by telephone from Grandi Molini Italiani SpA's base in Rovigo, northeastern Italy. ``The price of pasta has been increased by 10 percent. That's only the beginning.''
Record prices for foodstuffs from wheat to soybeans have stoked prices of bread, noodles and crackers worldwide, driving up costs for food companies including Sara Lee Corp. and complicating efforts by some central banks to reduce borrowing costs. Grandi Molini raised flour prices 200 percent between July and February, Costato said.
The threat of higher food prices risks further undermining Italy's $2 trillion economy. Consumer and business confidence are at two-year lows, manufacturing is in decline and inflation is at an 11-year high. Italy may be the ``first and potentially only'' country among the 15 nations that use the euro to enter a recession this year, Morgan Stanley said earlier today.
Italy consumes annually about 5.5 million metric tons of durum wheat, used to make pasta, of which it needs to import 2 million tons, Costato said. According to UNAFPA, an association of European pasta manufacturers, Italians eat on average 28 kilograms (61.7 pounds) of pasta a year. U.S. consumption is 9 kilograms per capita.
`Good Crop'
Global wheat production may gain 1.9 percent to 603 million tons in the season ending June 2008, the International Grains Council said last month. Consumption is forecast at 611 million tons.
``They've forecast a very good crop in the northern hemisphere, but that doesn't imply that prices will go back to the levels we saw six months ago,'' said Costato. ``The market needs to take into consideration that farmers could have accumulated so much capital that they can modulate their sales.''
Wheat for May delivery rose 83.75 cents, or 7.5 percent, to $12.0825 a bushel at 12:09 p.m. on the Chicago Board of Trade, after earlier gaining the exchange's daily limit of 90 cents, or 8 percent, to a record $12.145. Prices have more than doubled in the past year.
``We're concerned about the price rigidity further down the chain for our clients,'' Costato said. ``The producers have absorbed most of the cost increases so far, but the grains make up 60 percent of pasta and it's linked to the most expensive wheat, which is durum.''
To contact the reporter on this story: Marianne Stigset in London at [email protected]
