Executive Intelligence Review
Subscribe to EIR


World Grain Markets Are Now Non-Functioning; Grain-for-Trade Is Disappearing

April 10, 2008 (EIRNS)—Despite the fact that you may still hear daily hyper-prices quoted for agro-futures on the commodity exchanges, the reality is that the world grain markets are dysfunctional. Prices have "gone vertical"; and you may not obtain product at any price. With absolute tonnages of rice and wheat so scarce, "normally" exporting nations have put a hold on allowing food to leave their countries, in order to protect domestic consumption. No international mobilization yet exists for emergency increases in production, and making best use of the existing scarce supplies. Though speculators are still swarming on the Chicago Board of Trade and other exchanges, users of the actual hard commodity—nations, farmers, bakers and others—are madly scrambling to line up private pledges for grain. The following figures give a snapshot view for rice and wheat, as of the March issue of the monthly World Agricultural Supply and Demand Estimates by the U.S. Department of Agriculture (USDA).

Rice The tonnage of rice available for importing this year is falling drastically. The USDA estimated in March that rice for export was trending downward from the level of 30.85 million metric tons (mmt) traded in 2006/7, down to perhaps 29.39 mmt to be traded this year. But this fantasy does not reflect the recent announcements by major rice exporting countries that are now limiting or banning exports. Of the 29 million metric tons of rice for trade or aid, only seven nations account for 27 mmt, and four of them have restricted exports, possibly adding up to a "loss to the markets" of 11.2 mmt. They are (their "normal" annual export tonnage is noted): Vietnam (5 mmt); India (3.5 mmt); China (1.3 mmt); Egypt (1.3 mmt). Additionally, Pakistan, which exported some 3 mmt in recent years, has none for export, and is beset by grain going to Afghanistan. Thailand, the world's leading grain exporter, is also restricting exports. Thus, 24.2 mmt, or over three-quarters of all the rice traded on the world markets, may not be there in coming months. (mgm)

Wheat The tonnage of wheat traded each year is likewise falling. In 2005/2006, it was at the level of 116 million metric tons; then down to 111 mmt last year. This year, the USDA puts it at 105 mmt, but that is not accounting for the withholding that may occur. The top 8 wheat exporting nations would account for 96 mmt of wheat traded this year, but so far 21 mmt of that amount, from Russia and Kazakstan, may not all go on the market at all.