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Kai Ryssdal: The already-rising price of wheat jumped even higher on commodities markets in Chicago today. It happened after Russia extended its ban on wheat exports through late next year, ’cause of the fires and drought they’ve been having over there. From the United Nations today came word of a special meeting on global food prices that’s set for later this month. Just this week, a big spike in those prices has helped trigger deadly riots in Mozambique in east Africa. It brings to mind the big run-up in food prices two years ago also followed by widespread foot riots. This time around, though, officials are insisting things are going to be different.
Here’s our senior business correspondent Bob Moon.
Bob Moon: Russia is normally the third-biggest supplier, but it’s wheat crop has been decimated by drought and wild fires. And global wheat prices have surged by more than half this summer.
Still, at the UN’s Food and Agriculture Organization in Rome, Secretary Abdolreza Abbassian isn’t overly concerned by Russia’s move to extend its export ban.
Abdolreza Abbassian: I don’t think this decision by itself will lead us to any crisis. It does lead us to more uncertainty, and it does make the market very anxious.
Although prices are up by more than half since June, that’s far from the doubling of prices seen two years ago. And Abbassian says shortages are unlikely given a comfortable buffer stockpiled from record harvests the past two years.
Abbassian: U.S. will be exporting far more wheat this year than the last year. But even the drawdown on the stocks will still keep the stock level in the U.S. at a near 20-year high.
For now, though, speculators are betting the rising wheat prices will boost demand for less-expensive grains. And that’s also nudged prices higher for corn and rice.
At Washington’s Center for Strategic and International Studies, global food expert Johanna Nesseth Tuttle says it’s still nothing like the pressures created by the surge in oil prices two years ago.
Johanna Nesseth Tuttle: As gas prices rose very rapidly, corn prices also rose, and then you saw much more competition between food for fuel. And I don’t think that that’s happening at this point.
Some experts say the higher prices could actually have a beneficial effect by prompting farms to plant even more grain — and that could lead to a bumper crop next year.
I’m Bob Moon for Marketplace.
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