- 29th September 2010
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A recent report by the BBC’s Jeremy Cooke has highlighted the effects of the recent rises in the price of wheat on the world commodities markets, as well as looking at the way the commodities markets work to influence the grain prices. The report, which can be seen here, also looks into the after-effects of drought and wildfires in Russia and the future prospects for world grain supply.
The report opens with an interview with a grain farmer in Colorado in the US, showing how the rise in the price of wheat has now allowed them to make money from producing their harvest where last year the margins were too tight to guarantee any profit. The rise in the wheat price has actually allowed the farm to plant next year’s crop already and seed fields which previously would have lain fallow and unprofitable.
The result of the drought and wildfires in Russia’s grain-producing areas has led to the current ban on exports and pushed up demand for the wheat which is in circulation on the commodities markets. The resultant shortfall in the supply of wheat has helped to push up prices, however it seems that the presence of speculators on the trading floors of the commodities markets across the world is also prompting sellers to raise prices, and could be distorting the market’s ‘true’ picture.
According to Paul Meyer, the commodities broker interviewed for the programme, it is the uncertainty over future supply of wheat which is pushing up prices. He says that speculators are attracted by the uncertainty and thing there could be profit to be made.
However, the report concludes that there isn’t yet an actual crisis in the wheat markets. Should there be a repeat of the droughts, wildfires or floods next summer, there could be severe consequences.