Wheat the new gold as prices soar Friday, 24 August 2007 19:23
Bread prices are set to go up after wheat hit an all-time high on commodities market on strong global demand and flagging output.
Wheat prices on the world's major trading exchange, the Chicago Board of Trade, have surged to an all-time closing high of $7.225 a bushel, beating the previous record finish that was set in 1996.
Analysts say that wheat prices are rocketing to historic heights due to a smaller (global) wheat crop while demand is still growing due to biofuels, which take up crop space, and as incomes in the developing world go up.
Adverse weather conditions in key producing regions - such as Australia, Canada, the United States and parts of Europe - have slashed wheat supplies and sent prices through the roof, traders say.
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.
Earlier this week Irish producer of flour and oat-based products, Odlums, warned that prices for its products will go up due to increases in new crop wheat prices as demand increases.
The company said that with the global harvest season well under way, it is already clear that prices world-wide for the 2007 crop will be significantly higher than for the previous year.
'Shoppers will be hit by these prices as wheat crops will increase in price by at least 30%', it said in a statement.
Last month a report from the OECD and the UN said high commodity prices, that have been blamed on increasing demand for biofuels, could last through the decade - and also result in higher livestock prices.
The report said that while temporary factors such as drought and low stocks largely explain a recent hike in farm commodity prices, it will be structural changes in the entire agricultural system that will keep prices high over the next 10 years.
'Growing use of cereals, sugar, oilseeds and vegetable oils to satisfy the needs of a rapidly increasing biofuel industry is one of the main drivers in the outlook,' the report said.
