The price of bread spiked 30 percent in Mozambique, helping set off riots in Maputo a week and a half ago. Same thing happened two years ago in Mozambique and around the world when peak oil pushed up the cost of bus fares and food. This time a summer heat wave wilted a fifth of the Russian wheat crop and sent the global wheat market into fits. Some say global warming is ultimately to blame. Mozambique’s price controls may have done more harm than good. And yet, for all the market panic, and ground-level trauma, global wheat harvests have rarely been higher. What?
The wheat crop this year globally is also the third highest on record, according to the F.A.O., but the sudden supply interruptions make the markets jittery. In June, Russia was predicting a loss of just a few million metric tons due to hot weather, but by August it announced it would lose about one-fifth of its crop. Wheat prices more than doubled in that period.
“If you look at the numbers globally, the Americans, the Europeans and the Australians can make up the supply,” Mr. Abbassian said of the wheat harvest, playing down the chances of repeating the 2008 crisis. “There is no reason for this hype, but once the psychological thing sets in it is hard to change that perception, especially if Russia keeps sending bad news.”
The upshot: Investors in commodities markets scare easily. The price of wheat loses any relationship to the actual supply of wheat in the world. Mozambicans eat less.