prices have hit record highs and tight supplies of the staple
crop have ignited concern about rising food costs.
The price of higher-quality spring wheat jumped almost 25
per cent on Mondaythe biggest one-day increase to
The rise comes as the UNs World Food Programme warns
that it will have to start cutting rations or feeding fewer
people if it does not get more money to cope with the higher
cost of food.
Wheat is used to make staple foods such as bread, pasta
The main reason behind Mondays sudden rise in wheat
prices was a decision by Kazakhstan to impose export tariffs
to curb sales.
Top five wheat exporters are: US, Russia, Canada, Argentina
and European Union (EU).
Kazakhstan, a big exporter of wheat, said the curbs would
help it battle an inflation rate of nearly 20 per cent.
The move follows similar restrictions imposed by Russia
its difficult for these countries to continue to export
if prices are high domestically, said Sudakshina Unnikrishnan,
agricultural analyst at Barclays Bank.
Last year, tens of thousands of Mexicans marched in a protest
against the rising price of tortillas after the price of
the flat corn bread soared by over 400 per cent.
World wheat stocks are expected to hit a 30-year low this
year, partly driven by the worst drought in Australia in
100 years, which halved the winter wheat crop to 12 million
tonnes in 2007.
Reports of drought and water shortages in north-west China,
where most of the countrys wheat is grown, have also
spurred buying in recent days.
Unusually cold weather last year in places such as Ukraine
also hurt production.
Land for biofuels
Demand for alternative energy sources has led farmers to
sow less wheat and convert land to crops such as corn, sugarcane
and rapeseed, that can be turned into biofuels.
Ethanol, diesel and other liquid fuels can be made from
processing plant material.
But this means there is less land for growing food crops.
Wheat prices may come down as high prices convince farmers
to devote more land to the crop, but this takes time.
In addition to the supply problems pushing up prices, there
has also been growing demand.
Increasing wealth in China and India, for example, has led
to consumers eating more meat, which means more grain is
needed to feed farm animals.
The US Department of Agriculture forecasts that Chinese
imports of pork will double over the next ten years.