Wheat’s Eating You!

Headlines are grim.  Russia seems hell bent on establishing a new Iron Curtain. Their insistence is creating turmoil around global markets.  Much of this turmoil is materializing in dramatic prices changes.  Equities are particularly volatile now and seem to be struggling to find which direction they’re headed, although it’s been down thus far in 2022.  But other markets are also suffering from volatility.

What will you have for breakfast today or this weekend?  If toast or cereal are on the list of potential delights, you’ll want to keep reading.  Wheat is a grass cultivated for its seed and is a worldwide staple food first developed in the fertile crescent around 9,600 BCE.  According to the Food and Agriculture Organization of the United Nations, world trade in wheat is greater than all other crops combined.  It also has the distinction of being the leading source of vegetable protein in human food. In short, it’s important.

Speaking of short, wheat is also in short supply.  As it turns out, roughly 29 percent of global wheat is produced in Russia and Ukraine.  Other major exporters of wheat don’t have much spare inventory right now either.  According to the International Grains Council, stocks of wheat will fall to a nine-year low of 57 million tons by the end of the 2021/2022 season.  At the current pace of global consumption, that would be depleted in just 27 days.

Simultaneously, weather is wreaking havoc on America’s northern neighbors.  Canada is in the midst of a drought.  The dearth of water has hit roughly 40 percent of its wheat output this year.  All of these factors are lining up to push a food staple to expensive levels.  We’ve already been experiencing energy costs taking a bigger bite out of our monthly budget, but it is starting to look like wheat will eat into them as well.