South Asia Investor Review

Wheat Price Touches $900 Per Ton Triggered by wheat export curbs by Kazakhstan and the lowest world inventory in 26 years, wheat price hit a new record at $25 per bushel or about $900 per ton. This translates into Pakistan Rs. 55 per kilo for raw wheat in bulk excluding transportation, milling and bagging. It represents a 400% increase in less than a year. According to the U.S. Department of Agriculture's Foreign Agricultural Service, Kazakhstan is the sixth-largest exporter of wheat, behind the U.S., Canada, Russia, Argentina and the European Union. Kazakhstan is in the belt of wheat production that stretches from Ukraine through southern Russia. It already has exported nearly seven million tons of grain, of the available 10 million tons from the 2007-08 crop, Agriculture Minister Akhmetzhan Esimov said. Price Doubled Since Dec, 2007 In my January 15, 2008 blog post Wheat Flour Shortage in Pakistan , I wrote as follows: " Former Prime Minister Shaukat Aziz announced in Sept,...

The ongoing rapid economic growth in the BRIC (Brazil, Russia, India and China) countries and emerging economies such as Pakistan has dramatically increased demand for food, oil and metals driving up prices. Here are some of the recent headlines that I find particularly notable: 1. It costs the US Mint two pennies worth of metal to make one penny. 2. One Indian rupee coin is worth Rs. 35 when melted and turned into razor blades. 3. Gold and oil prices hit new highs in the world market in 2007. 4. The price of wheat has nearly doubled from about $200 per ton to $400 per ton in just a few months. The current worldwide commodity boom began with the genuine increase in demand from the fast growth in emerging economies of the world. However, at least part of some of the recent increases appear to be driven by speculation in the commodities markets with many hedge funds and big investors trying to make a fast buck. One of the downsides of such speculation is that it may fuel worldwide infla...