Grain prices staying high, stoking unrest

Algeria and other wheat importers continue to buy grain even as prices rise, suggesting cereals will be costly in the coming months, a senior economist at the United Nations’ Food and Agriculture Organization says. “Demand is not rationing even though prices remain high, and this is going to support prices for some time,” Abdolreza Abbassian at the Rome-based FAO said in an interview last week. “Countries are getting concerned as prices are staying high.”

Russia last year banned cereal exports after the country’s worst drought in at least half a century destroyed crops and cut 2010 production, sparking a surge in grain prices across the world. Ukraine also restricted exports. Paris-traded milling wheat futures have more than doubled in the past 12 months. Governments in Africa have faced protests amid rising costs and high unemployment, and a revolt toppled Tunisia’s leader.

“There’s also a question of instability in some countries, which could result in some countries purchasing more, and therefore adding more to the demand side,” Abbassian said. A surge in food and energy costs is stoking inflation in emerging markets and causing riots that may topple governments, Nouriel Roubini, the New York University economist who predicted the financial crisis, said Wednesday on Bloomberg Television’s “The Pulse.” Read more ...

This blog is written by Martin Little The Global Miller, published and supported by the GFMT Magazine from Perendale Publishers.