Home > Business/Markets > Wheat price fears are impacting brewers and food producers stock prices

Wheat price fears are impacting brewers and food producers stock prices



Big News Network.com     Saturday 7th August, 2010

Droughts, wildfires and floods have destroyed harvests and sent the global wheat price soaring, now its hitting the stock market.

Russia’s devastating wildfires and rampant flooding in Pakistan, coupled with a heat wave across much of Eastern Europe, has sent wheat prices soaring by 25% in the last week and are hitting the share prices of brewers and food producers.

Near-panic selling on global stock markets is lowering the share prices of brewers and food producers as investors worry that the skyward momentum of the global wheat price may impact their profit margins.

The Danish brewer Carslberg saw the greatest drops with their share price losing 5.1%, while Diego, the owner of brands such as Guiness saw a reduction of 2.2%. Associated British Foods fared comparatively well with a share price drop of 1.5%.

These figures came on the back of an announcement by the Food and Agriculture Association on Wednesday that it was dropping its wheat production forecast for the world by a significant margin.

The FOE, however, has played down fears of an impending food crisis, saying that such anxiety was “not justified at this point”.

Global wheat stocks in June were at 194 million tons, figures for the end of July showed a reduction to 187 million tons.

The current upward trend in the wheat price has not been seen since 2008 when the cost of wheat spiraled and led to a vast and dangerous food crisis across Africa, which was largely under reported by the international media.

Industry analysts have said that the future food security of the world depends on how long the upward trend in the wheat price lasts.

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