Wheat is basic for food production throughout the world, and essential in the diets of hundreds of millions of people. But the cost of wheat-based products could be rising significantly.
The price of wheat has risen 83 percent at a commodities exchange in the U.S. city of Chicago over the last year and more than doubled on the Paris market. On Wednesday, wheat prices hit a two-and-a-half-year high in Chicago and an “historic high” on a Chinese exchange.
The price hikes have mostly been caused by natural calamities in major wheat-producing countries. There were droughts in Russia and Ukraine, flooding in Canada and Australia, and now drought over a large region of China, the world’s biggest wheat producer.
State television in China showed images Wednesday of withered crops in cracked earth and said the drought in one province is the worst in 200 years. The government said it would spend at least $911 million to divert water to the affected region, and more money to treat crop disease.
In the last week, both Chinese President Hu Jintao and Premier Wen Jiabao have visited the nation’s parched wheat-growing region. Rain has been sparse there for three months and little is in the forecast. The Chinese leaders vowed “all-out efforts” to combat the drought, which has damaged more than five million of the country’s 14 million hectares of wheat fields.
China is also the world’s biggest wheat consumer. It now imports relatively little wheat. More Chinese imports could affect the price of the commodity even more.
Some countries in the Middle East and North Africa have recently increased their wheat purchases in an effort to have enough for their food production. Volatile food prices have contributed to riots and protests across the region.