Cyclone Yasi exacerbates global food supply concerns

The impact of Cyclone Yasi in north east Queensland has exacerbated global food worries, with prices climbing due to record highs on shrinking supplies of wheat, corn, soybean and oilseeds. These price hikes are set to effect buyers of this type worldwide.

Indonesia, for example, ordered hefty rice imports this week to boost stocks by a third in the latest sign that governments concerned about rising food prices and dwindling supplies are rushing into the market, a move that could push inflation even higher.

The Chairman of Australia’s main sugar industry group Canegrowers said up to a quarter of the sugar cane crop in the state of Queensland may have been lost, a loss surely set to impact on sugar buyers.

“Given there has been such a wide area if impact from this cyclone, we are looking at losses on the other edges of 5 to 10 percent and close to the centre of the cyclone up to 50 percent of the crop could be lost,” Afl Cristaudo said.

Problems with Australia's wheat crop as well as lingering effects of last summer's drought in the Black Sea region have boosted the role of the United States on the export market.

In January, global food prices tracked by the United Nations Food and Agriculture Organization hit their highest level on record. The FAO said last week its Food Price Index rose for the seventh month in a row to reach 231 in January, the highest level since records began in 1990.

The rising prices have raised concerns over inflation, protectionism and social unrest, factors behind the 2008 food crisis, and prodded the G20 to promise action.

Indonesia's government met to discuss food security on Wednesday. Chief Economic Minister Hatta Rajasa asked state procurement agency Bulog to secure imports to gradually boost rice stockpiles to 2 million tonnes from the current 1.5 million tonnes, underlining fears shortages could cause price spikes.

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