Hitchiker's Guide to Wheat Prices: Don't Panic

Russia has lost some 20% of its wheat harvest and more may be threatened. Russia has already closed off exports until December 31. Markets seem pretty jittery and The Economist concurs that more losses may be expected in more regions.

An IFPRI brief shows that we shouldn't panic yet, though:

• The losses are about 1.6% of world wheat supply. The US has more than that in storage right now. I would add that a number of other countries (China, India) have been building their supplies heavily in the last several years, further dampening the effect.
• Spot prices are up, but the volatility is still within what we've experienced since the food crisis and wheat futures are not showing the kind of response we saw last time.
• Australia, the US, and other regions are looking at higher crops than last year, offsetting some of the losses.

If you don't have someone removing asbestos from directly outside your window, you might be able to hear this video by one of the authors.