August 3, 2010

Russian wheat prices hike amid fires

Wheat prices skyrocketed Monday (August 2) as news that wildfires are spreading over key-growing regions in Russia prompted investors to pour new money into the markets.

Participants say the news of Russia's wheat woes is fuelling fears of a repeat of problems in 2008, when a surge in food prices sparked riots in many countries.

However, wheat prices are climbing against a substantially different backdrop, meaning a run on food supplies is unlikely this time around. Analysts say inventories are abundant, especially in the US, lessening the chances of a food panic.

Speculative buyers are still seeking to catch the next strong rally have flocked to wheat over the past weeks.