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

Obama: I Will Do 'Everything I Can' to Close Guantanamo

US president says prison continues 'to inspire jihadists and extremists around the world' More

Sierra Leone Educates on Safe Ebola Burials

Also, country is improving at rapid response to isolated outbreaks, but health workers need to be even faster, officials say More

Religion Aside, Christmas Gains Popularity in Communist Vietnam

Increasingly wealthy Vietnamese embrace holiday due to its non-religious glamor, commercial appeal 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.
US Decision on Cuba Underscores Divisions Among Miami Cubansi
X
Sharon Behn
December 19, 2014 9:34 PM
For decades, older, more conservative Cubans have been gathering at Café Versailles on the corner of Calle Ocho to eat Cuban food and talk politics. After hearing of President Barack Obama’s decision, a number of them gathered in front of the café with posters to protest. VOA's Sharon Behn reports on the situation.
Video

Video US Decision on Cuba Underscores Divisions Among Miami Cubans

For decades, older, more conservative Cubans have been gathering at Café Versailles on the corner of Calle Ocho to eat Cuban food and talk politics. After hearing of President Barack Obama’s decision, a number of them gathered in front of the café with posters to protest. VOA's Sharon Behn reports on the situation.
Video

Video Three Cities Bid for Future Obama Presidential Library

President Barack Obama still has two years left in his term in office, but the effort to establish his post-presidential library is already underway. The bid for the Obama Presidential Library is down to four locations in three states -- New York, Hawaii, and Illinois. As VOA’s Kane Farabaugh reports, each of them played an important part in the president’s life before he reached the White House.
Video

Video Cuba Deal is Major Victory for Pope’s Diplomatic Initiatives

Pope Francis played a key role in brokering the US-Cuba deal that was made public earlier this week. It is the most stunning success so far in a series of peacemaking efforts by the pontiff. VOA religion reporter Jerome Socolovsky has more.
Video

Video Fears of More Political Gridlock in 2015

2014 proved to be a difficult year politically for President Barack Obama and a very good year for the U.S. Republican Party. Republican gains in the November midterm elections gave them control of the Senate and House of Representatives for the next two years -- setting the stage for more confrontation and gridlock in the final two years of the Obama presidency. VOA National Correspondent Jim Malone has a preview from Washington.
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
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 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.

All About America

AppleAndroid