A rise in the price of durum wheat is bad news for those buying pasta, but it bodes well for investors.
Durum wheat for delivery to Port-la-Nouvelle on the Mediterranean Sea, which handles exports of the grain also used for cous cous, rose to €336.58 a tonne last week, its highest point in nine weeks.
Abah Ofon, an analyst of soft commodities at Standard Chartered, said he expected the wheat market to remain "elevated" until the end of this year's first quarter. "Current prices are still well below the highs seen in 2007 and 2008 and we do not expect the market to rally to the extent that it did then," he added.
The peak in prices in those years was prompted in large part by the effects of extreme weather on global harvests in 2006 and 2007.
The latest price jump comes amid soaring global food prices, which reached a record high last month, according to the latest data from the UN Food and Agriculture Organisation.
Prices began to rise sharply in the second half of last year because of a combination of poor harvests in Russia and Pakistan, stockpiling by large countries such as China and India, and trade barriers leading to supply pressures.
Overall food prices in the UAE crept up 1.04 per cent in the first 11 months of last year compared with the same period the previous year. The slight rise masked bigger jumps in the cost of food staples.
Mr Ofon said wheat price rises would hinge largely on the potential recovery in Russia's output and an eventual lifting of its ban on exports. Russia banned exports of wheat in August to control domestic prices. It led prices to their highest levels in two years at the time.
"We expect pressure to mount as planting intentions in the US and Russia become clearer in March and May, respectively, although the US's ability to increase wheat acreage will be compromised by competition from other crops," he said.