Wheat prices surge
- 17th August 2010
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The recent wildfires which have devastated parts of the areas around Moscow bring the global shortage in wheat supply into sharp focus. A result of the fires, and the drought which preceded them, is that wheat prices have hit a 22-month high.
In fact, such is the shortage of wheat-producing land and the increase in demand, the price of wheat has increased by 50 per cent since late June. Markets are concerned that the increase in price will lead to a knock-on rise in the price of flour-related products across the world. Experts in wheat procurement for the food production business have said that the markets would be unable to ignore a 50 per cent rise in wheat prices.
Russia itself, which has seen huge areas of cropping land destroyed by wildfires, is the fourth-largest exporter of wheat in the world, behind the US, the European Union and Canada.
This kind of issue shows the vital importance of increasing the land that is available for wheat crops – not only to protect against possible wheat shortages in the future, but also to encourage a stable market in which commodities can be traded.
The problems faced by Russia underline the value of an investment in agricultural land in Ukraine, the case for which has been strengthened in the wake of the fires. Wheat production in Ukraine has not been affected in any way by the Russian wildfires, and harvesting on our agricultural land investment project has commenced in earnest. Investors in this project are in a prime position to take advantage of the recently-announced Russian ban on grain exports, a ban which could stay in place for as long as two years. The order was made after a prolonged drought, followed by wildfires, devastated crops; such is the vulnerable nature of agri-business when exposed to the mercy of the elements.
News has also just been released of a $15.1 billion loan to Ukraine from the International Monetary Fund. The loan is intended to aid further fiscal stability in Ukraine and reform the energy sector, and will no doubt boost confidence further in the country as an investment prospect.
