Thursday, August 5, 2010

Food prices and farm prices to be aggravated by Russian wheat embargo

I wrote yesterday about the Russian drought and its effect not only on wheat prices worldwide, but on real estate prices and farming activity in the United States. Decreased wheat production anywhere in the world (especially in Russia) will result in higher wheat prices and will tend to increase the value of farmland.

Today, the Russian government banned the export of wheat through the end of the year. This ban will affect global wheat prices, with the resulting ripple effect on food prices and farm prices in the United States (and elsewhere):
In Chicago, September wheat shot up to 7.83 dollars a bushel from 7.26 dollars while the December contract jumped to 8.09 dollars from 7.55 dollars.

Dmitry Rylko, director of the Institute for Agricultural Market Studies, described Putin's decision as one that would be "extraordinarily painful for market participants," Interfax reported.

Real estate investors have not typically been concerned with wheat prices. For those who are interested in an old fictional dramatization of wheat price speculation and the impact of global events on the individual speculators and our own economy, check out Satan's Bushel from the 1920's.

Except for the information technology, the commodity markets work the same way today as they did when the book was written.

1 comment:

  1. 愛,拆開來是心和受兩個字。用心去接受對方的一切,用心去愛對方的所有。......................................................................