The dramatic rise in the price of food commodities for some of the world’s most populous countries is hitting Russia and China hard, according to Ambrose Evans-Pritchard.He points out in The Telegraph that the situation is getting worse for Russia and China, and that wheat is not the only worry.
The problem is not just the dramatic 70% rise in wheat prices due to the drought and fires around the Black Sea, but also massive Chinese imports of corn. Corn has increased in price by 40% since June due to that Chinese demand.
That’s two major sources of food for two of the world’s most populous countries. Russia won’t be able to export wheat this year because of the drought and China is tearing into global supplies of corn.
Evans-Pritchard points out that this could lead to some difficult decisions for central banks trying to fight deflation while food prices inflate, specifically the Bank of England and the Federal Reserve.