March wheat futures went for a record $24 yesterday, while the May wheat futures rose the maximum 90 cents allowed to $11.99 a bushel at the Chicago Board of Trade yesterday. Cold winters in Canada and India have harmed their winter wheat crops, and reports about drought in northern China.
The Kazakhstani government imposed export tariffs on the remaining 110 bushels of their winter crop, the country have already pledged to export 75 percent of this year’s winter wheat. This price jump comes on top of already surging cereal prices due to corn based ethanol and increased consumption world wide.
20 percent of American households live on less than $10,000 per year, and these people use 32 percent of their income on food. The next income quintile lives on about $26,000 a year, and these households use about 17 percent of their income on food. A doubling in food prices over three years is not small potatoes for people who live with small margins.