Thursday, January 27, 2011

Big Algerian Wheat Purchase Spooks Traders

Just another example of what happens when governments around the world create trillions of dollars worth of fiat currency out of thin air. That money is used to buy commodities that have intrinsic value such as wheat, rice, gold and silver; ie those items that cannot be created by adding zeros to a bank balance sheet.

Wall St Journal

U.S. wheat futures surged to fresh 29-month highs Wednesday as growing concern over food prices drove Algeria to make another large grain purchase on the world market.

Algeria sparked Wednesday's rally by buying 800,000 metric tons of milling wheat, with traders estimating the deal brings the African nation's total purchases for January to about 1.8 million tons. The source of Algeria's latest purchase wasn't disclosed.

Government buyers across North Africa and the Middle East have stepped up wheat purchases in recent weeks following unrest in Tunisia, Jordan and Egypt. Rising food prices are helping to drive the discontent in those in full