Incessant flooding in Australia’s northeastern state of Queensland is battering the area and could take a toll on global food prices. According to the Associated Press:
With global food prices recently passing their 2008 highs, a natural disaster that impacts the prices of a key commodity like wheat could resonate on the world’s poor population. Although Australia is the world’s fourth largest exporter of wheat, Queensland provides only a fraction of the crop – 5%, according to the BBC. Still, the Financial Times reports: “Floods could cause as much as half the crop – 10m tonnes – to be downgraded to less than milling quality.” Still, “supply concerns pushed up U.S. wheat futures on the Chicago Board of Trade 1.4 per cent to a five-month high on Monday.” Check out this 10-year wheat price chart for more information.
Queensland also produces and exports almost all of Australia’s sugar, and the industry group Canegrowers estimates that 18% of the 2010 crop has been abandoned, according to the FT. Now Australia will have to import sugar from Brazil and Thailand in order to meet its own sales commitments this year. The price of sugar has reached its 2007-2008 highs, as this commodity chart from mongabay.com shows.
The Australia-based chief economist for JP Morgan, Stephen Walters, said that food prices in Australia may rise by as much as 30%; with sugar cane, fruit and vegetables, and wheat and other grains being most affected, according to the BBC.
Flooding continues to spread, and has reached Brisbane, the largest city in Queensland. “We now face a reconstruction task of postwar proportions,” the state premier Anna Bligh said to reporters.
Posted by Rishi Sidhu.
