Oil hits record highs $100 plus - Wheat prices hitting UK retail food prices. Northern Wreck will be the ruin that wrecks Gordy's day

Oil price hits record high in US Press Association

The cost of light, sweet crude reached a record 100.40 in New York .....speculation that OPEC will cut output ... Tuesday saw a 4.5% surge in trading on the New York Mercantile Exchange (Nymex), following a 3% rise last week.

Wheat prices start to get a public airing in UK

Anna Hill On BBC Farming Today this morning spoke to a wheat farmer (6 mins into programme) who explained production costs rise, fuel - diesel was 35p a litre to 50 p litre , Fertilisers are £300 a tonne compared with £150 last year .Today it is costing £100 to produce a tonne of wheat.

She points out that world stocks are down from 20 weeks to 9 weeks.

Hugh Wiseman CamGrain farmers co-op (they have deal with Sainsbury's) talks of a crisis in world food supplies. World is short of wheat for humna consumption. Increases in wheat and grain yields seem to have reached a plateua . "We are down to the bare boards". Also referred how CAP reduction to zero for set aside would have to be continued despite concerns of the RSPB. See EU set aside zero subsidy policy produces a rapid response by English farmers.

Richard Clarke News Editor of the Grocer explained how their weekly "100" survey showed food prices across 100 typical food items had risen 8%. This included white bread up 33 % semi skimmed milk 21% and free range eggs 38%. He ascribed this to wheat costs, improved diets in the Far East, biofuels and road fuels, and plastics.

If interested in history See December 23, 2007 Wheat , corn, soya prices at record levels - demand exceeds world supply, fertiliser, farm and fuel costs rise - food costs jump and inflation follows and also September 16, 2007 Australian drought - poor spring rains - higher world wheat prices in prospect - low stocks and heavy demand and even earlier , November 01, 2006 World wheat shortages loom - prices soar - when it was suggested .."Get out the dough bowl and buy some yeast."

Now for the slightly better news. On MGEX Spring Wheat has fallen back from highs last week at US$18.15 a bushel down from US$18.60 and the spot month limit has fallen back to 60 cents and will be removed from Feb 25th.

Compare this with the graph Sunday Feb 18th when we asked ,had wheat reached its top ?

Should you bump into Lord King of the Bank of England & Northern Wreck or any of his double first Economists please pass on the news.

PS : Looks like the House of Lords are going to spend some time looking at the small print of the Granite Contract. See Tuesday, September 25, 2007 (the day the Directors cancelled the Interim divvy ) Northern Rock plc - Down’s Syndrome North East Association (UK) - Granite "securitisation" and the duties of the Directors of Northern Wreck- a puzzle and also Richard Murphy's useful exegisis of Granite.