Wheat Hype Driving Prices Up - Is it Real?

The focus of the media on the Russian drought, and to a much lesser extent, one in Ukraine, and an abundance of rain in Canada, has created a narrative for wheat that can no longer be substantiated, as traders and speculators move in on the news to make some quick money.

As some wheat farmers have said from past experiences, this is nothing new, and the driving of prices through the media reporting on weather has caused huge price fluctuations in the past, and will continue to do so in the future.

That does have them concerned as to what the wheat market really is, and makes it extremely hard to project how many acres they should plant for the spring harvest.

It seems obvious, as what is happening this summer is unprecedented as far as Russia goes, and is very unlikely to occur next year.

There are always pockets of weather that damage wheat and other crops around the world, and the abundance of plantings have easily made up for that, as many countries have increased the planting of grains in order to protect themselves domestically.

Farmers selling during this current run-up in wheat prices are profiting handsomely, but that has nothing to do with planting for next year, which historically after these types of situations, usually create far too much supply and prices come crashing down, after farmers optimistically make decisions on what is happening today, and then pay too much for the following year's inputs.

In other words, they usually break even if they're lucky, and in many cases, experience losses.

Is wheat experiencing a shortage of supply? For those countries counting on Russian wheat that's the case, but taking into account global supply, it's highly unlikely there's a shortage, and places like Egypt are simply buying wheat from other countries, including the United States.