Analysis - Food squeeze next worry for emerging markets

By Carolyn Cohn

LONDON | Thu Aug 5, 2010 1:43pm EDT

(Reuters) - A food price crisis may be the next stumbling block for emerging economies, even as their bonds and stock markets rally in relief at an easing of the euro zone's debt crisis.

Wheat prices have jumped by more than 50 percent since June and are likely to rise further due to expectations of tighter supplies, triggering concerns about a repeat of the food crisis in 2007/08 that forced interest rates higher in many economies and led to emergency controls in others.

The UN's Food and Agriculture Organisation (FAO) cut its 2010 global wheat forecast by about 4 percent this week and said world wheat supplies may shrink next year if severe drought continues in Russia, Europe's leading wheat producer.

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