News / Europe

Wheat Prices Soar After Russia Bans Exports

Multimedia

Wheat prices are soaring on global commodity markets following Russia's ban on wheat exports.  But experts currently do not expect a repeat of the price spikes that sparked food riots in several countries in 2008.

Russia was the world's third-largest wheat exporter last year, but this year's severe drought has destroyed at least 20 percent of the harvest.  Global commodity prices for wheat have been climbing since June as a result.

Russia's announcement that it would ban exports added to concerns about world supplies and pushed prices higher still.

But globally, there is no shortage of wheat.

"Here in the U.S., it wasn't but three or four months ago that we were bemoaning what an excessive oversupply we had of wheat," says agricultural economist Dan O'Brien at Kansas State University.

World wheat supplies are strong after two years of record harvests, according to the U.N. Food and Agriculture Organization.

Commodity markets have been volatile in recent years, and the price spikes of 2007-2008 may be fresh in traders' minds. But Maximo Torero at the International Food Policy Research Institute says there is a risk that markets will overreact.

"And that's what is happening," he says. "It is overshooting.  And what we need to do is to try to calm that and make it go to what real market fundamentals are saying."

Fundamentals including energy prices and demand for biofuels are not putting as much pressure on prices as they did when food costs spiked two years ago.

While the loss of Russia's wheat is significant, Torero does not expect wheat prices to remain as high as they are now.  And consumers may not feel the effects immediately because there tends to be a lag between when commodity prices rise and when the impacts reach shoppers. But if prices stay high, the impact will be significant, says Food and Agriculture Organization economist Abdolreza Abbassian.

"The longer it takes [for prices to come down], it will increase the import bill of poor countries," he says. "It will have major repercussions on the poor, whether the poor in the U.S. or Africa.  Poor people spend a lot of their income on food."

Abbassian says if Russia's drought continues, it may affect next year's harvest as well.  That would open up opportunities for others to make up the shortfall.

Experts say today's high prices may encourage wheat farmers in other countries to increase their production.

Related video by Mil Arcega:

You May Like

Sydney Hostage-taker Failed to Manipulate Social Media

Gunman forced captives to use personal Facebook, YouTube accounts to issue his demands; online community helped flag messages, urged others not to share them More

UN Seeks $8.4 Billion to Help War-Hit Syrians

Effort aimed at helping Syrians displaced within their own country and those who've fled to neighboring ones More

Who Are the Pakistani Taliban?

It's an umbrella group of militant organizations whose objective is enforcement of Sharia in Pakistan 'whether through peace or war' More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Putin: Russian Economy to Rebound in 2 Yearsi
X
December 18, 2014 5:13 PM
Russian President Vladimir Putin held his annual end-of-the-year news conference Thursday, tackling questions on the Russian economy, the crisis in Ukraine and Russian relations with the west. VOA's Jeff Custer reports.
Video

Video Putin: Russian Economy to Rebound in 2 Years

Russian President Vladimir Putin held his annual end-of-the-year news conference Thursday, tackling questions on the Russian economy, the crisis in Ukraine and Russian relations with the west. VOA's Jeff Custer reports.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video Will Pakistan School Shooting Galvanize Pakistan Against Extremism?

The attack on a military school in Pakistan’s northwest city of Peshawar left 141 dead, including 132 children. Strong statements of condemnation poured in from across the world. The country announced three days of mourning, and the leadership, both political and military, promised retribution. VOA's Ayesha Tanzeem looks at how likely the Pakistani government is to clamp down on all extremist groups.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.
Video

Video Turkey's Authoritarianism Dismays Western Allies

The Turkish government has been defiant in the face of criticism at home and abroad for its raids targeting opposition media. The European Union on Monday expressed dismay after President Recep Tayyip Erdogan lashed out at Brussels for criticizing his government's action. Turkey's bid to be considered for EU membership has been on hold while critics accuse the NATO ally of increasingly authoritarian rule. Zlatica Hoke reports.

All About America

AppleAndroid