Floods will send wheat prices soaring

published 6 August 2007

As the floods recede, we will have to wait several more weeks to see "if Britain still has any wheat or barley worth harvesting", says Colin Tudge in The Guardian. But it's a sure bet that the cost of a loaf of bread is set to rise; a similar deluge in France, Europe's largest wheat producer, last week sent milling wheat to a record e213 a tonne on the Euronext Liffe platform.

Drought in eastern Europe has reduced crops by up to 40% and the European Union expects the total cereal crop for 2007 to be 1.6% below the last five years' average. Global inventories are already at a 25-year low.

Across the Atlantic, US farmers exported a weekly total of 2.08 tonnes late last month, a figure last exceeded in June 1996, and US wheat prices in the Chicago Board of Trade hit $6.64 a bushel their highest in 11 years. You can spreadbet on the price of wheat, or buy an exchange-traded fund that tracks the wheat price see www.etfsecurities.com.