Wheat, corn and soybean futures at Chicago all closed sharply lower. The stronger US dollar is not helping US grain exports, making the most expensive grain in the world more expensive for many.
A H2 type red wheat out of the US Pacific Northwest is now priced around US$405 per tonne FOB. To land this product into the Asian market it would cost a buyer approximately US$442. The only wheat of similar quality that is more expensive is now priced out of drought-stricken Argentina. Black Sea wheat of similar quality would be some US$100 lower into the same buyers. Australian wheat almost US$80 per tonne less again. It does raise two important questions. Why is US wheat so expensive and why is Australian wheat so cheap.

Additional weakness in wheat came from thoughts that Russia will not actually follow up on yesterday’s rhetoric and will instead agree to a continuation of the Ukraine grain export corridor agreement. This “positive” line of thought goes directly against what Russia is saying is more likely to happen…. some traders and analyst may have watched a little too much of the Disney channel on Thursday night.
Wheat found further negative pressure from fears of the generally bearish outlook for the world economy. You can’t buy stuff if you don’t have any money. The sudden jump in the value of the US dollar and some bond yields is shortening up supply to some degree, hurting those with fewer US dollar reserves than those with plenty. We may yet see a world food shortage, but not from the lack of supply of food, but simply from the lack of the ability to pay for it. One does tend to worry about what form charity will take in a world such as the one we now live in. Will starving countries sacrifice sovereignty to feed the starving or will they allow sovereign decay to develop on the bottom of an empty bowl. ………………. sorry, got a little dark there.