Russia cut production due to drought, but as the world’s second largest wheat exporter, has also been floods in Canada, said this year’s wheat harvest will be reduced by 17%. The world’s largest wheat exporting country — United States, the two former rivals have been far behind them, as the Russian wheat cut in the biggest winners.

For example, North Africa and the Middle East, the traditional buyers of Russian wheat, because Russia withdrew from the wheat export market, these countries are actively seeking sources from other regions. Take the world’s largest wheat importer in Egypt, the Russian had been its main suppliers. However, the U.S. Department of Agriculture announced on the 10th of this month, will be sold to the Egyptian market in 2010/11 delivery of 120,000 tons of U.S. wheat. The U.S. Department of Agriculture announced on the 5th of export sales report showed that Egypt bought the previous week 95,200 tons from the U.S. hard red winter wheat.

According to the U.S. Department of Agriculture forecast that next year by the end of May, the U.S. wheat reserves will be nearly 30 million tons, the highest for 23 years. Adequate reserves means that a large number of export earnings, there is no doubt that the U.S. will surge in the current round of price increases the profit potential of wheat pours.

As for the possible loser, goes back to the world’s major wheat-importing countries, Egypt and Brazil, and the Middle East, Africa and some Asian countries mainly rely on imports, wheat prices are too high will cause them to hit. Analysts believe that the world’s two major wheat consuming countries — China and India could be due to sufficient reserves from the impact of wheat futures prices.

British Eclectica Asset Management fund manager George – Agriculture, said Lee, the biggest losers will be those that dietary consumption of a single country. Such as Yemen, food prices are directly linked to the price of wheat, bread prices have been close to the price of flour. In the United States and Europe, the wheat as a raw material only packaging and marketing, part of the cost, so American consumers will not feel much change in food prices.

Food prices will become the accomplices of inflation heating up

Some analysts believe that Russia’s drought affecting wheat supplies may only be a preliminary warning, if the drought does not improve, other agricultural crops must be seriously affected. Europe, the impact of drought is not only wheat, Italy’s Nong Ye estimates that this year’s crop of tomatoes may Jianshao 1 percent to a Chengban, Belgium potato farmers Ye Zhong Zhi Xia Die forecast production, Germany, this year’s barley production decreased because the two Cheng, beer Mianlindamai Jiage upward pressure on inflation, these factors are sufficient to become an accomplice warming.

The consequences of rising inflation in emerging countries have to face pressure to raise interest rates as emerging countries, consumer price index (CPI) statistics for a basket of goods, food typically accounts for a large part.

Experts believe that although the United States may further implement the policy of quantitative easing, analysts and investors in emerging market countries has been prepared to tighten monetary policy. ING Emerging Markets chief analyst Charles – Robertson said the case of food prices between 2006 and 2008 may not be as serious, but the emerging markets is a very serious matter, because these countries account for CPI basket of food prices 20% share to 25%. He also pointed out that Nigeria is a typical example, the country’s CPI, the share of bread and cereals 25%, the risks of soaring wheat prices would be great.

In this regard, the Indian central bank has already responded in March to raise interest rates four times since the measures have been. Analysts believe the central bank interest rates coupled with the opportunity still exists. Other Eastern European countries such as Poland, also may allow their currencies to appreciate, to balance the import of food prices.

For already in the economic downturn and high unemployment rate, the plight of European and American countries, food prices continued to rise good for the worse. Because of rising food prices if the transmission lead to other prices and wages, so that if inflation continued to rise, central bank governors of these countries will face a dilemma, on the one hand want to raise rates to curb inflation, on the other hand have to worry about high unemployment level.

Even worse consequence is that if the developed countries, economic conditions worsened and the financial crisis due to huge reduction in agricultural subsidies, supply of agricultural products may decrease, grain and other agricultural prices will therefore rise further. For example, Greece, under the debt crisis, start of fiscal austerity plan to reduce agricultural subsidies to contain.

Not hard to imagine, if the United States, the euro zone, Britain and Japan have entered sovereign debt Gaoya interval developed economies are similar Greek fiscal austerity measures, agricultural prices should continue to rally Kongpa .

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