Roubini: Jump in food, energy prices ‘can topple regimes’
By Tom Keene and Stuart Wallace
Jan 26, 2011 8:42 AM PT
A surge in food and energy costs is stoking inflation in emerging markets and causing riots that may topple governments, said Nouriel Roubini (video of Roubini interview), the New York University economist who predicted the financial crisis. Global food costs monitored by the United Nations jumped 25 percent last year, reaching a record in December, and crude oil traded in New York is at $86.38 a barrel, about 53 percent more than its average over the last decade. There have been protests in Algeria and Egypt, and Tunisia’s President Zine El Abidine Ben Ali fled the country on Jan. 14. “In emerging markets, it’s leading to rising inflation, to reduction in disposable income, it’s leading to riots, demonstrations and political instability,” Roubini said in an interview in Davos, Switzerland, today with Tom Keene on Bloomberg Television’s “The Pulse.” “It’s really something that can topple regimes, as we have seen in the Middle East.” Governments from Beijing to Belgrade are increasing imports, limiting exports or releasing supply from state stockpiles to curb food inflation. Countries probably spent at least $1 trillion on food imports last year, with the poorest paying as much as 20 percent more than in 2009, the UN says. The Standard & Poor’s GSCI Agriculture Index of eight futures rose 44 percent last year, the biggest advance since 1974, data compiled by Bloomberg show. The gains were led by cotton, corn and wheat as flooding in Canada, China and Australia and drought in Russia and Europe ruined crops. Wheat rose another 7.7 percent this year and corn 4.3 percent. Russia, which accounted for about 13 percent of global wheat exports in 2008-2009, banned grain shipments last year after its worst drought in at least a half century. Ukraine also imposed export limits to curb domestic prices. Security forces and police broke up a rally against President Hosni Mubarak’s government in Cairo earlier today, firing tear gas and wading into the crowd with batons. Core inflation in Egypt reached 9.65 percent last month. In Algeria, three people were killed and 420 injured in clashes with police this month. …
Roubini Says Jump in Food, Energy Prices ‘Can Topple Regimes’
By Jeff Wilson and Whitney McFerron
Jan 26, 2011 12:51 PM PT Wheat rose, capping the longest rally since November 2009, while corn and soybeans climbed as countries increase purchases from the U.S., the world’s biggest exporter, to cut food inflation and quell civil unrest. Food-exporting countries are “strongly advised” not to restrict shipments to prevent “more uncertainty and disruption” in world markets, the United Nations said. Governments in Egypt, Algeria, Morocco and Yemen have faced protests amid rising costs and high unemployment, and a revolt toppled Tunisia’s leader. “Sovereign nations are beginning to stockpile food to prevent unrest, and that will help to boost demand for U.S. grains,” said Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana. “You artificially stimulate much higher demand when nations start to increase stockpiles.” Wheat futures for March delivery rose 18.25 cents, or 2.2 percent, to close at $8.565 a bushel at 1:15 p.m. on the Chicago Board of Trade, capping a seven-day advance of 11 percent. Earlier, the price reached $8.6125, the highest for a most- active contract since Aug. 6. The grain has jumped 73 percent in the past 12 months. Corn futures for March delivery climbed 13.75 cents, or 2.1 percent, to $6.5775 a bushel, the first gain in three sessions. The price has surged 82 percent in the past 12 months. Soybean futures for March delivery advanced 11 cents, or 0.8 percent, to $13.855 a bushel. The oilseed has gained 46 percent in the past year. …
Grain, Soybeans Rise as Food Riots Spur Demand for U.S. Exports
