Middle East wheat importers are watching soaring prices with alarm, worrying they could bite into their ability to feed hungry populations that depend on subsidised prices of basic staples.
"I can only describe the situation as scary," said Dinos Mitsides, deputy chairman of the Cyprus Millers' Association, where millers have increased their prices by over 40 percent in line with the global market trends.
Cyprus is small, but Egypt, Jordan and Algeria are among the world's largest importers of wheat, on occasion making purchases amounting to hundreds of thousands of tonnes at a time.
The costs of these imports have soared dramatically in recent months as wheat prices have risen to record levels. On Wednesday, Chicago Board of Trade (CBOT) wheat futures in electronic trade climbed above $9 per bushel for the first time.
"In the long term, if this situation persists it will cause major economic ramifications but for now many of these countries cannot afford to leave populations hungry in addition to all the political tensions," a senior Jordanian official involved in grains purchases said.
For the moment, though, Iraq, Jordan, Egypt and Algeria will not stop scaling down purchases, despite the higher import bills, analysts, millers and state buyers said. State purchasing agencies have made massive buys in recent weeks in large tenders that have actually have tightened supply and contributed to a doubling of wheat prices since April.
They are announcing new tenders to ensure smooth deliveries in the coming months. International traders, millers and officials say state purchasers cannot risk tampering with subsidy regimes that have dulled the impact of steep bread price rises after hikes years ago that sparked civil unrest in several countries, including Egypt and Jordan.
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