Wheat prices soar in Russia drought

Hottest summer in 130 years destroys one-fifth of wheat crop, sending prices soaring.

    Russia is experiencing its hottest summer in at least 130 years [AFP]

    "The fruits of the year's labour of the farm went up in smoke - this is very painful," Pavel Grudinin, director of the Lenin State Farm, said on Russian television.

    Concerns about Russia, coupled with a drought that has also hit Ukraine and Kazakhstan as well as a low harvest in Canada, have caused concerns about a shortage of wheat and the subsequent food price rises that could cause.

    Speaking to Al Jazeera, Caroline Hurford from the UN World Food Programme, said: "Clearly it's very worrying because we're entirely dependant on donations and therefore we can buy less [wheat] with the donations if the prices goes up.

    "Wheat is one of the major purchases that we make internationally, it's a third of what we buy in terms of commodities.

    "Ninety-five per cent comes from the Black Sea region, that's Russia, Ukraine and Kazakhstan, which are huge wheat producers."

    'Largest one-month jump'

    On Monday, wheat prices spiked to the highest prices on the Chicago Board of Trade and the Euronext in Paris since 2008.

    "Wheat prices have seen the largest one-month jump in more than three decades on the back of a severe drought in Russia, prompting warnings by the food industry of rising prices for flour-related products," analysts at Barclays Capital said.

    The higher prices will mainly affect people in the Middle East, Africa and Asia, while Europeans and Americans are expected to pay slightly more for bread.

    "The big losers will be consumers where the diets are more pure," George Lee, manager of the agriculture fund at Eclectica Asset Management in London, told The Associated Press news agency.

    However, large wheat exporters such as Argentina, Australia and the United States are expected to benefit from the higher wheat prices.

    Russia has experienced its hottest summer since record-keeping began 130 years ago, and wildfires are spreading into farmland.

    SOURCE: Agencies


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