World Bank urges nations to avoid food export bans
World News - "The World Bank on Monday urged countries to refrain from imposing policies that could trigger a new global food price crisis as drought-hit Russia said it could extend a grain export ban into next year.
World Bank Managing Director Ngozi Okonjo-Iweala told Reuters the sharp spike in grain prices since last week did not amount to a crisis yet, but emphasized increased food price volatility would hurt poorer countries.
She said the poverty-fighting institution would activate a food fund when the World Bank board, currently in recess, reconvened in early September in case the situation worsened. [Reuters]
A combination of bad weather and speculation by hedge funds has pushed the prices of many raw materials into the stratosphere,... From its low of $2.40 a bushel in late 1999 to last week's high above $12 is a near-400% move during eight years.
Wheat prices for September delivery have risen 50% since late June alone. In Europe, wheat has traded at above ?230 (about ?175) a tonne late last week. Prices are expected to continue rising this week after Russia announced last Thursday that it was banning export sales of the grain. [The Herald (Scotland)]
Ukraine's grain traders will ask the government to introduce a temporary ban on wheat exports, Kommersant newspaper reported, citing an unidentified grain company manager.
Ukraine's customs introduced additional grain checks in ports, curbing exports, the newspaper said. Exporters want the government to limit exports officially as it will allow them to disrupt contracts and avoid penalties, according to Kommersant. [Bloomberg]
Most merchants have suspended purchases of domestic wheat for export for fear of shipments becoming ensnared in red tape, Volodymyr Klymenko, the head of UZA, the Ukrainian grain traders' union, said.
While Ukraine has said it does not, unlike neighbouring Russia, plan a ban on exports to protect domestic supplies, its Customs Service late last month subjected shipments to unspecified quality tests which, allegedly, give no clearance criteria.
"It is unclear whether vessels will go or not," Mr Klymenko said.
In such circumstance it was "economically dangerous" for traders to buy wheat for shipping abroad, meaning they had "no plans" for exports.
"It seems like a game of Russian roulette with Ukrainian grain," he said. [Agrimoney]
Okonjo-Iweala said the World Bank was conducting a survey of vulnerable countries amid reports that exporters had cancelled wheat contracts to Bangladesh and were reviewing contracted wheat supplies to Egypt, the world's largest wheat importer.
She said flooding in India, Pakistan and China had also raised food supply concerns.
"We don't see a crisis yet and are hoping to head it off by asking countries not to undertake policies that will precipitate a crisis," she said in an interview....
She said a recent World Bank study of 26 developing countries showed significant increase in food price volatility over the past year.
Okonjo-Iweala said the Bank had been in contact with food aid groups working among communities in poor countries to gauge the situation. [Reuters]