The price of wheat has fallen to a ten-year low, why aren’t we celebrating?
If you know your Bible, you will know that Egypt and the surrounding area once saw seven years of feast, followed by seven years of famine. Implicit to this story is the idea that good harvests are times for celebration. The moral: save during the good times for when things are not so good.
The price of wheat has fallen to a ten-year low – down to $4 a bushel, the last time it was that cheap was in 2006.
It’s partly down to kind weather, partly down to extensive planting in the first place. The International Grains Council has amended its forecast for wheat production worldwide to 743m tonnes – a new record, and 1% up on last year.
The FT quoted Ken Stein, co-manager of Kottke Commodity Capital in Chicago as saying: The world can source wheat from the northern hemisphere or southern, eastern or western. That increases the food security of the world a whole heck of a lot.”
It feels like a good news story, as indeed does the fact that the oil price is still around half of its level from two years or so ago. But the farmers seem none too happy – French farmers are especially aggrieved because in France, the harvest was actually very poor.
But it’s interesting how these days, cheaper commodity prices are greeted by the markets. If the oil price rises, stock markets often rise too.
Let’s just hope new technology does not evolve that could solve the world’s major problems – such as the falling cost of renewables combining with energy storage, heralding an age of ultra-cheap and clean energy; or stem cell research and genetics enabling us to create all the food we need; or graphene enabling us to cost-effectively solve the problem of water desalination; or robots taking on all the mundane tasks that no one really wants to do – what disasters would such advances entail?