Price of wheat up 100% in US dollars in just two months

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Thought those of you who eat wheat might be interested.
http://www.csmonitor.com/2008/0227/p01s ... tml?page=1

"Wheat prices hit record high. The cost of March spring wheat hit $24 a bushel Monday, double its cost two months ago." This refers to the cost of wheat on the futures market and the cost will likely be passed on to consumers in a couple months. The increase will be less outside the US because part of the reason for the high cost is due to the declining value of the US dollar which is also partly why gold and oil are at record highs.

One company raised the price of flour by 12% last October. They announced another increase of 46% effective April 1st. Ouch! Other companies are sure to follow.

Retail food prices since last year:
consumer food prices - up 5%
Cereal and baked goods - up 6%
Dairy products - up 13%
vegetables - up 6%

"Already, agricultural experts say, it's getting hard to find the type of wheat used to make pasta, noodles, pizza, and bagels."

"Supplies of some types of wheat will be extremely tight," says economist William Lapp, president of Advanced Economic Solutions in Omaha, Neb. "I don't think we'll see physical bread lines, but supplies will be just tight."

This is some pretty serious stuff. One of the reasons for the shortage is increased demand for biofuels. I think the shortage of food and energy will continue to get worse and we are likely to experience double-digit percentage increases in the cost of food and energy over the next few years. I hope you are all getting 10% wage increases to adjust for inflation. Maybe not because food and energy prices aren't included in the official inflation numbers. The Fed recently announced their plans to continue cutting interest rates which will further destroy the value of the US dollar and drive inflation even higher.

The main problem is we have to choose between bad and worse... People paid too much for their houses during the boom, so we have 2 choices... a Home price correction (major) or inflation. Largely since people have been using home Equity as a credit card they will just fold if home values go down.

So we can either have even more foreclosures, or we can correct the house prices by de-valuing the dollar. Of course both are happening (inflation plus home value decrease) but one or the other has to bear the brunt of the damage.

Either way we are screwed. With a house price correction, the people who cause the issue (banks and middle class overspenders) will get punnished, but unfortunatly those two groups have a lot of influence... Inflation will hit the rest of the country (even those areas that saw little to no boom) so the impact will spread out... in a sense everywhere else is going to be paying for california, florida, and New york's jackass overspending and they are going to get what amounts to a free reduction in debt (because they will be paying back the debt in cheaper dollars).

Yes...with the rising price of wheat, so will the price of flour rise....and subsequently, the price of pizza, bread and all those other
products made with flour will rise.

eat potatoes! As long as you're sensible, they can be;
vegetable
starch (grain substitute)

Just don't double up on white, refined grains when eating potatoes and eat the skin, for goodness sake! Potatoes have more potassium than bananas and B vitamins.

Besides the inflation and biofuel nonsense, shipping prices have been driving up the price of foods. Another reason to support local food suppliers.

Also, the very low interest rates set by the Fed contributed to the dotcom and housing bubbles - it seems the Fed in its infinite wisdom has concluded the solution is to cut interest rates even further. The US has a serious leadership problem - the politicians' answer is to borrow 1 % of GDP from China, give it away and hope all will be well.
What you mention about the weak dollar making wheat more expensive also applies to oil, etc.
The so-called 'core' inflation you mention is something economists dreamt up because the prices of food and hydrocarbons are hard to predict, therefore they invented a fictitious inflation that is not the one anybody actually experiences but that they find easier to predict.
Since, despite the weak dollar, the trade deficit is growing, the dollar will just continue to weaken. An economy completley dependant on borrowing from abroad is not a healthy one.