Wheat surges to $10 per bushel, further imperiling European ethanol production

Wheat prices rose to an all-time record $10 per bushel on Monday as concerns grew over potential shortages caused by crop failures in Europe, Argentina and Australia.

U.S. wheat exports have already reached 90 percent of their 2007-08 target of 1.175 billion bushels, which covers the period through June 2008.

In October, despite rtemarks that corn prices were causing wheat price increases, Professor Wisner of Iowa State said high corn prices were the result of the high price of wheat, not the other way around – and that wheat prices had been driven up by poor weather in regions such as Australia.

Criticism of ethanol’;s impact in wheat prices in Italy took a turn for the bizarre recently when Italy’s antitrust agency announced an investigation into illegal price fixing in Italy’s pasta industry. Pasta makers have raised prices by 60 percent this year, citing the 60 percent increase in worldwide wheat prices and the fact that 60 percent of the cost of pasta is wheat.

“Yes, the price of wheat has risen, but it has simply gone back to 1985 levels,” Rosario Trefiletti, president of the Federconsumatori consumers’ association told CNN. “So who’s been profiting from low prices these past 20 years?”

The USDA’s chief economist blasted the Washington Post at the National Farmers Union meeting reecently over an article connecting high wheat prices to ethanol demand. He said the spike in wheat prices had nothing to do with ethanol; that the 2007 wheat crop was planted before corn prices spiked, and that the price increases is the low wheat harvest yields in Canada, the Ukraine, Australia and the European Union.

Achim Steiner, executive director of the U.N. Environment Program, said that linking biofuel crop demand and higher commodity prices was only speculation at this stage. He said that further study would be required to firmly establish such a linkage, noting that it is not likely that biofuel demand is responsible for the increase in Italian pasta or Mexican tortilla prices.

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