Wheat supplies—oh goody

For those not old enough to remember, 1972-73 saw a grain deal with USSR to cover one of their wheat shortages.  They bought so much wheat, it disrupted the internal USA market and set off a food price spike that would trigger inflation for the rest of the decade.  The Harvard Crimson called it "an economic Bay of Pigs for the Nixon administration" in an article named America Gets the Shaft.  Then, the failed USSR wheat harvest was usually blamed on the corruption surrounding Brezhnev and the errors of Marxism.  Now the Russian grain shortage is just another sign of climate change in the northern hemisphere.

Wheat Prices Are Spiking

Lucas Kawa | Nov. 8, 2012

Wheat prices and futures have surged around the world today after Russia announced that its wheat production fell 30.6% in 2012.

European wheat prices have spiked, reaching a four year high of 279.25 euros/tonne. Wheat futures at the Chicago Board of Trade for December are up 6'0 on the day thus far and have cracked the 900'0 barrier.

A recent report from the UN’s Food and Agriculture Organisation indicates that global wheat production declined by 5.5% this year.

This report comes just one day before the World Agricultural Supply and Demand Estimates are released.

In the future, the higher price of wheat may be passed on to consumers via cereals, beers, and other products that use wheat as an input.  more