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Prices soaring as biggest grain exporters halt foreign sales
By Javier Blas, Isabel Gorst, and Lindsay Whipp
Financial Times, London
Wednesday, April 16, 2008
The global food crisis intensified on Tuesday as Kazakhstan, one of the world's biggest wheat exporters, halted foreign sales and rice prices shot to a record high after Indonesia stopped its farmers from selling the grain abroad.
In another sign of turmoil, a big food company in Japan, Nihon Shokuhin Kako, said high corn prices had forced it to buy cheaper genetically modified corn for the first time, breaking a social, though not legal, taboo and signalling that opposition to GM foods could weaken in the face of record food prices.
Meanwhile, fresh wheat export curbs in Kazakhstan, the world's fifth-largest exporter, and the rice bans in Indonesia, threaten to trigger bans in other food exporting countries, which will now face much higher demand from importing countries.
Hussein Allidina at Morgan Stanley in New York said pressure for export bans was likely to increase elsewhere as developing countries suffering high inflation tried to combat rising local prices by cutting back on exports of agriculture commodities.
Indonesia -- which joins Vietnam, Egypt, China, Cambodia, and India in banning foreign sales -- was expected to export the grain this year due to a bumper crop. Corn futures prices in Chicago last week hit a record $6.16 a bushel, up 30 per cent in the past three months.
Indonesia's export ban boosted the price of rice futures in Chicago to a all-time high of $22.17 per 100 pounds, up 63 per cent since January. Wheat prices moved higher to $9.11 a bushel and traders warned prices could rise further as the Kazakhstan ban together with restrictions in Russia, Ukraine, and Argentina have closed a third of the global wheat market.
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