Monday 9 August 2010

What Wheat Panic?

We are in the middle of the high season for Silliness. The newspapers this morning are full of a a very traditional story of Tories stealing children's milk. And Russia has banned exports of wheat after crop failure and fears are being stoked up of this being extended more widely..

Now this is bad for Russia and I don't blame them. However, the world is a balanced place and you can also find that there are bumper wheat crops in the USA and China. None of this has stopped the price of wheat from doubling in a month and tabloids running scare stories of how a loaf of bread might soon cost the same a gold ring etc.

Times like this are marvellous trading opportunities, the story will run its course and the price of wheat will come down. Handily, you can if you want speculate on this (and feel morally virtuous, after all you are betting that food will become cheap, not expensive) in an ISA with a SWEA.L etf. I'll update on where it gets to by the end of the month.

12 comments:

lilith said...

I advise a wheat and dairy free diet ;-)

Steven_L said...

I shorted the Sept future in the early hours of Friday morning and cashed in £122 up about 1am this morning.

Easy money, had pretty much written off my spread betting losses this year, have enough margin in there now to have a serious crack at winning my money back!

CityUnslicker said...

nice spot SL - I missed the original pull back, but have hopes of a decent fall in the next week or two

CityUnslicker said...

lilith - and what would you eat? I have had experience of wheat free - a total pain as everything had wheat in it for bulk stabilisation.

lilith said...

Wheat is indeed ubiquitous, rather like corn syrup in the USA...they put it in everything. In answer to your question, rye and spelt mainly :-)

oakeskismez said...

The fires are burning in Russia is the country most affected by Vladimir Putin on the situation in world commodity markets.
uk price

Mark Wadsworth said...

I don't eat bread, so I wasn't too fussed about this until I read somewhere that it'll push up beer prices, so I ran out of the room screaming.

Budgie said...

If wheat goes up in price, then wheat substitutes (rice, potato, maize, oats etc) will also rise. And conversely of course.

Spelt is a form of wheat. The main cereal in (British) beer is barley.

Elby The Berserk said...

Mark,

As Budgie notes, British beer is mostly brewed from barley; wheat is more commonly used on the continong, and can produced some very fine pale beers. I was in the USSR in 1968, and there were tankers in the cities selling what was known as "kvass" - beer brewed from black bread.

As for how much of our barley is home grown I don't know. Mind you, what most beer and lager is brewed from I dread to think anyway.

I had a holiday job in Robinsons Brewery in Stockport for a few years. Lovely drop. Still is. Family owned as well, and the fines pale mild in the country. You'll have to go to Cheshire and North Staffs to get it though.

CityUnslicker said...

i should do more posts on the alcohol industry...

Steven_L said...

750ml bottles of Hoegarrden are still £2 a pop at Tesco - get in there, quick!

James Higham said...

There's plenty of wheat - it's just being rationed, on the fear stories you mentioned, to push the price sky high.