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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: SG who wrote (70567)	1/27/2011 7:55:13 AM
From: elmatador	Respond to of 218540

food crisis is emerging: panic buying. traders and investors looking for rising prices to dent demand should be careful: governments will pay almost any price to secure wheat and rice if they feel social unrest is looming because of rising domestic food prices. Commodities daily: Seeds of a fresh food crisis By Javier Blas, Commodities Editor Published: January 27 2011 11:51 \| Last updated: January 27 2011 11:51 The current spike in food prices has followed the chain of events of the crisis of 2007-08 in almost every aspect, a worrisome prospect. First the crop failures; second the export restrictions; and third the initial food riots followed by governments taking emergency measures to control rising food costs, including price caps and cuts to import tariffs. And now the fourth element of the 2007-08 food crisis is emerging: panic buying. Over the past two weeks, developing nations have put in orders for unusually high amounts of staples, mostly wheat and rice, or announced plans to build stocks. Governments are reacting to growing social unrest about rising domestic prices. The result: international agricultural commodities prices are already rising fast just as the market suddenly faces a steep increase in demand. In Chicago, soft wheat prices have risen to a fresh 29-month high at $8.60 a bushel. The cost of premium hard wheat, used to bake bread, is rapidly approaching the key $10 a bushel level in Kansas and Minneapolis. Rice prices have also moved higher to almost $550 a tonne, although the cost of the Asian staple is rising from a lower level and is still far below the record of 2008. The accelerated buying is coming from a broader spectrum of developing nations. Algeria bought 800,000 tonnes of wheat on Wednesday, bringing the total since the start of the year to a hefty 1.7m tonnes. Although the North African country is one of the world’s biggest wheat importers, buying about 5.0m-5.5m tonnes a year, its purchases so far in 2011 appear well ahead of normal patterns. And Saudi Arabia has said it plans to double the size of its wheat stocks to cover the demand of a year. Food prices FT In depth: News, comment and analysis on rising concerns about food security and prices Bangladesh, one of the world’s largest rice importers, on Thursday raised its import target for the grain to 1.2m tonnes, up from an initial estimate of 600,000 tonnes. Badrul Hasan, director for procurement at the nation’s Directorate General of Food, told Bloomberg News the reason was “panic buying” among the country’s population. As government step-up their purchases, the shortage of supplies is going to become more evident, and is likely to push prices even higher, leading to outright panic buying, as in 2007-08. As such, traders and investors looking for rising prices to dent demand should be careful: governments will pay almost any price to secure wheat and rice if they feel social unrest is looming because of rising domestic food prices. Rice supplies are relatively ample after a good harvest in some south east Asian countries, including Vietnam and Thailand. But supplies of wheat are scarce and production, at the global level, is unlikely to rebound enough in 2011-12 to replenish inventories. Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.