Futures Market News
Food prices continue to climb, as rioting breaks out in Africa
Sep 03, 2010 01:12 PM
The rising price of key grains and social unrest in Africa raised fresh concerns of a food crisis that could mirror or exceed that which wracked the developing world in 2007 and 2008. Yesterday, Russian prime minister Vladimir Putin announced that the nation would extend its moratorium on the export of grain until 2011 - a harsh and surprising measure which reflects growing resource nationalism in one of the world's largest exporters of food and energy.
Key agricultural and food commodities surged in price today. On the Chicago Board of Trade, wheat futures for December delivery gained 21.6 cents to $7.354 per bushel. Corn futures climbed 9.2 cents to $4.566 per bushel, while soybeans jumped 17 cents to $10.26 per bushel.
In the city of Maputo, the capital of Mozambique, violent riots broke out on Wednesday and Thursday, killing seven people and leaving nearly 300 wounded by the strife. The riots began as a response to the rising price of bread, which rose by 30 percent.
During 2007 and 2008, shortages and price increases set off similar riots around the world, and the disturbances were credited with the collapse of governments in Haiti and Madagascar. The U.S. and its agricultural sector are increasingly seen as having to take on a key role in meeting demand, as the world confronts the possibility of two years without any exports from Russia.
Since September of 2009, the Financial Times reports, the United Nations Food and Agricultural Organization Index has climbed from 152.8 to 175.9, and wheat prices have gained more than 60 percent.
The FAO called an emergency meeting to cope with the situation; the Financial Times reported that the body said, "The purpose of holding this meeting is for exporting and importing countries to engage."
Dan Manternach, the chief wheat economist at Doane Agricultural Services in St. Louis, told the paper, "This is a wake-up call for importing nations about the reliability of Russia."
Putin, in a statement from Moscow, said that Russia can "only consider lifting the export ban after next year's crop has been harvested and we have clarity on the grain balances." The nation, he said, must "end unnecessary anxiety and to ensure a stable and predictable business environment for market participants," according to the Financial Times.
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