How A Drought in China Could Send Egypt into Further Unrest

Two trends worth paying attention to:

1) Yesterday, the UN Food and Agriculture Organization warned that droughts in China may severely imperil China’s wheat crop.  This means that the world’s most populous country may soon have to import large quantities of wheat.  This news caused wheat futures to jump sharply on the Chicago Mercantile Exchange to a 30 month high.

2) Egypt is among the world’s largest importers of wheat. This is from

I’m not enough of an economist to add much to a discussion about how rising wheat prices may affect the political economy of Egypt. But World Food Program director Josette Sheeran did share this insight yesterday:

Across the region, we have seen civil protests driven by a complex array of different factors, but all sharing one thing in common – growing anxiety about rising food prices and concern about access to food.

In many of the protests, demonstrators have brandished loaves of bread or displayed banners expressing anger about the rising cost of food staples such as lentils.  These are the nutritional building blocks of life, and if people feel that rising prices are pushing these food items out of reach, growing anxiety adds to the general feeling of exclusion, resentment and despair.

The protests and disturbances in the Middle East coincide with another period of rising global food prices.  The UN Food and Agriculture Organization Food Price Index in January reached a new historic peak, rising for the seventh consecutive month and surpassing the peak of the 2007-2008 food price crisis….

When it comes to food, the margins between stability and chaos are perilously thin.  It is still too early to quantify the role that rising food prices are playing in the current wave of discontent, but we know that during the high food price crisis in 2008, food prices were a factor in causing riots and anti-government protests. Volatility on the markets can translate quickly to volatility on the streets and we all should remain vigilant.  [emphasis mine]

This is definitely something to keep an eye on.