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Middle East turmoil fuels sell-off in some food prices

February 22, 2011 | 10:04 pm

The surge in crude oil prices is getting the headlines, but it’s masking a more consumer-friendly shift within commodity markets: sinking prices for some of what’s in your food pantry.

Wheat, corn and soybean prices all tumbled on Tuesday, which commodity analysts said stemmed in large part from the same Middle East turmoil that is driving oil higher.

Markets' fear is that the popular revolutions sweeping the region could interrupt food-commodity orders from, or shipments to, key countries, including Libya, said Jim Barrett, a broker at commodities firm Lind-Waldock  in Chicago.

Cornstalks Others said prices were under pressure as speculators retreated from the grain and bean markets amid a general move away from risk-taking, given new uncertainties about the global economy as oil rockets.

“Turmoil and uncertainty in the Middle East and North Africa have encouraged traders to cut long positions in the grain markets, even with strong supply-and-demand fundamentals,” Roy Huckabay, an executive at  Linn Group in Chicago, told Bloomberg News.

Whatever is driving the sell-off, if it continues it could help cool what has been serious food-cost inflation worldwide over the last year.

Wheat futures in Chicago slumped 60 cents, or 7%, to $7.95 a bushel on Tuesday, extending the decline from the recent 2 1/2-year high of $9.04 a bushel reached on Feb. 14.

Wheat had more than doubled from $4.28 a bushel in June.

Corn futures fell 30 cents, or 4.2%, to $6.90 a bushel Tuesday. The price had hit $7.23 on Thursday, also a 2 1/2-year high.

Soybeans lost 70 cents or 5.1%, to $13.11 a bushel. The price now is down almost 10% from the recent peak of $14.51 a bushel on Feb. 9 -- though still up sharply from $8.94 a bushel last June.

The next big test for grain and bean prices may come on Thursday and Friday, when the U.S. Department of Agriculture is scheduled to update its forecasts of corn and bean plantings.

Meanwhile, prices of other pantry staples continue to soar in futures markets. Coffee bean futures hit a 14-year high on Tuesday, up 1.35 cents to $2.74 a pound, as supplies remain tight amid rising global demand. A year ago coffee sold for $1.32 a pound.

And more bad news for chocolate lovers: Cocoa futures hit 32-year highs, up $87 to $3,586 a metric ton, because of continued political turmoil in the Ivory Coast, the world’s biggest cocoa bean producer.

-- Tom Petruno

Photo credit: Mark Boster / Los Angeles Times