The Grains ETF Graph Goes Ballistic
I hesitate to put this posting up. It is a true catastrophe that is unfolding in Russia. My heart goes out to the folks there. Facing a brutal winter and watching your food burn is a very wrenching place to be.
Russia has announced a ban on wheat exports for the rest of the year. They must. Though they are now a major wheat exporter, the recent drought had caused a large shortfall, now wild fires are burning many fields of what remains.
I think these folks do a good job of covering the story, and with the proper balance when looking at the likely outcomes:
In this Saturday, July 31 file photo a field of unidentified cereals burning near the town of Voronezh some 294 miles south of Moscow, after weeks of searing heat and practically no rain. A severe drought destroyed one-fifth of the wheat crop in Russia, the world’s third-largest exporter, and now wildfires are sweeping in to finish off some of the fields that remained.
And while there is a drought in Russia, Canada has problems from too much water:
‘Severe effect on production’
However, the production outlook for the coming crop year is projected at 18.45 million tonnes — the lowest since 2002.
“All that rain and all those unseeded acres are having a severe effect on production,” White said.
The board estimates that the excess rains have left 4.25 million hectares unseeded and ruined the prospects for another one million hectares that did get in the ground.
Allen Oberg, chairman of the wheat board’s board of directors, said the unseeded land and low production forecast have put Prairie farmers in a dire situation.
“Farmers are resilient, but when you cannot even get seed into the ground, it’s devastating,” he said.
With every hedge fund around doing a “pile on” as nothing else is moving, with a ‘beyond parabolic rise” in the grain prices, and with RSI at 80 I would NOT jump on this trade. But I would be willing to go to the store and buy a couple of bags of flour, pancake mix, and noodles. I figure about 4 months supply before the next wheat crop hits. (There are both Spring Wheat and Winter Wheat in two hemispheres and with different planting schedules based on latitude; so we have a shot at recovery soon.) I just hope this is not the “new normal” during a cold turn.
When it gets cold, you do get more drought. One can only hope this is a “one off” or the world will become a very hungry place.