February 19, 2008
Bernanke’s Policies Run Against the Grain
Bernanke’s Rate Cuts Force Asia Back to Price Limits, Subsidies, by Shamim Adam
“Bernanke’s Fed has lowered its benchmark interest rate 2.25 percentage points since September, to 3 percent. The widening spread between U.S. and Asian borrowing costs draws more foreign money into the region, threatening to feed asset bubbles. Instead of raising their own borrowing costs or letting their currencies appreciate faster, Asian governments are resorting to artificial price curbs and subsidies.
Since Jan. 15, China’s National Development and Reform Commission has required producers and sellers of grain, cooking oil, meat products, milk, eggs and liquefied petroleum gas to seek government approval to raise prices in an effort to cool inflation expectations and ease ’social tension.’”
The price of wheat has nearly tripled since early 2006. A box of the imported breakfast cereal I regularly eat here in Beijing costs around $6.30 … the same box in the US costs around $4.60, I believe. I’m not looking for a substitute… yet.
Related:
Wheat at around $10 a Bushel - December 19, 2007
Breakfast of Champion Trend Followers - September 25, 2007
February 19th, 2008 at 9:17 pm
thats nothing - check out the hard red spring wheat at the MGEX - flirting with $20/bushel - they finally had to raise the trading limits to $1.35 to make a market after almost 12 consecutive limit up locks. March contracts expire this week i believe, so if the may contracts keep rippin, we have serious problems. Check out DBA - holds 25% each corn, soybeans, wheat and sugar. most of the contracts are july and december - the sugar is june
February 20th, 2008 at 3:13 am
chad: I didn’t know about this Minneapolis exchange and didn’t realize that there were different wheats around. Thanks.