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Missing wheat from the war is less than 1% of global wheat crop

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Re: Missing wheat from the war is less than 1% of global wheat crop

#151

Post by imtringued »

screenbreakout wrote: post #123
denni9th wrote: post #65

Earlier quoted context omitted.

Egypt is mostly desert, the only arable land is on the banks of the Nile.

While I was there this winter, I saw huge new plantations of dates? or palm (oil)? in the western desert sucking up the underground aquifers....fields with cows grazing there... also they're probably growing wheat....doesn't look sustainable but what do I know about the politics of economic corruption.... bread is dirt cheap, it being a bit more expensive might lead them to improve their diet somewhat... I mean their…

There are probably some plants that grow better in Egypt than any other place. "Comparative advantage" makes you eternally dependent on the benevolence of other nations because wheat is more important than dates. The idea that Egypt has the same negotiating power as the wheat exporting nations is laughable.

In principle, one could attempt a afforestation project in Africa and it would pay dividends over centuries, but the current system doesn't reward longevity or sustainability.

Re: Missing wheat from the war is less than 1% of global wheat crop

#152

Post by log1_aa »

I do not agree with the author's analysis - the impact on supply and demand are enormous, and the 1% number does not matter.

Effectively, the wheat buyer in Egypt (and other importers) needs to pay high enough prices such that: 1. Industrial wheat consumers in Europe/US and elsewhere substitute wheat with other products, making more wheat available for exports. 2. Previously untapped stocks get exported instead of stored.

Is there enough wheat worldwide? Yes. The question is what price Egypt needs to pay to secure its supplies, and if Egypt can afford to pay that price.

More details for the interested:

Ukraine exports around 20 million tons of wheat each year. https://www.indexmundi.com/agriculture/?country=ua&commodity.... We have to assume that Russian wheat will continue to be exported - there is no way that countries like Egypt will sanction Russian wheat. In the worst case scenario Ukraine will not ship any wheat for a year due to port closures and destroyed infrastructure, so the world loses 20 million tons of wheat exports.

There are two ways to solve the issue - by increasing supply or rationing demand. High prices help with both.

Supply solution: 1. Increase physical supply: It is not easy to source this amount of wheat elsewhere, especially not within a year. Most wheat in the northern hemisphere was planted last fall, meaning higher prices will not trigger a supply response for 1.5 years. Argentinean and Australian farmers can still increase their wheat plantings, but this will not be exported until November 2022 at the earliest. At the same time, the Ukrainian exports are missing right now. 2. Draw down global wheat stocks: Higher prices can make previously uneconomical exports profitable, pulling wheat from every available storage. The backwardated futures curve that helps with that - it makes storing wheat uneconomical. Stocks everywhere will draw down further, which means that wheat prices will remain elevated and susceptible to any further supply shocks (bad weather).

Demand destruction: High prices destroy demand for wheat. Human consumption is relatively inelastic, meaning higher prices have little impact on consumption (and catastrophic consequences). However, wheat is also fed to animals or used for ethanol production, where demand is more sensitive to prices.

Source: Working in wheat trading.

Re: Missing wheat from the war is less than 1% of global wheat crop

#153

Post by imtringued »

groby_b wrote: post #18
VLM wrote: post #7

The point is the economy is currently based on something hits the news, hoard hoard hoard, price explodes, empty shelves and high profits. Happened to TP a couple years ago and is in process with microcontroller chips and will be happening soon with food. People hear story on news, think there will be empty shelves, buy a multi-year supply of boxed Mac n Cheese, the shelves are indeed empty, more people think there w…

> The point is the economy is currently based on something hits the news, hoard hoard hoard, price explodes, empty shelves and high profits. Given that that extends well beyond individual behaviour (Wheat futures[1] are currently bonkers), this raises the question if the claim that "capitalism is the optimal way to allocate resources" is really true at least for the current version of capitalism. This extends well be…

>Given that that extends well beyond individual behaviour (Wheat futures[1] are currently bonkers), this raises the question if the claim that "capitalism is the optimal way to allocate resources" is really true at least for the current version of capitalism.

It works, if the good in question is not needed to satisfy a basic human need. It also works, when the good in question can be produced so that everyone has enough.

It doesn't work, if there is a sudden temporary loss of production capacity or if the production capacity can never catch up to demand (think how we can't make more land, it's already there).

Re: Missing wheat from the war is less than 1% of global wheat crop

#154

Post by nradov »

littlestymaar wrote: post #132
nradov wrote: post #61

Earlier quoted context omitted.

It's easy to store small quantities of wheat for years at home, but that's irrelevant to this situation. We're talking about grain elevators and warehouses.

These places have regulated hygrometry for exactly this reason.

The type of places at risk of food shortages don't necessarily have wheat storage facilities with regulated hygrometry. Developed countries will be fine, and have facilities for long term grain storage. It's the poorest countries that will be hit by rising wheat prices and intermittent shortages.

Re: Missing wheat from the war is less than 1% of global wheat crop

#155

Post by nkurz »

randomdata wrote: post #75
nkurz wrote: post #46

Earlier quoted context omitted.

> Winter wheat, which would be harvested this spring Since this is a site that cares about accuracy, I'll mention that while winter wheat is planted in the winter, it's harvested in the summer or fall. It doesn't grow fast enough to be harvested in the spring. Instead, it's a way of getting a boost on the season by getting the roots established early. I don't think there is anywhere it can be harvested early enough t…

> I'll mention that while winter wheat is planted in the winter, it's harvested in the summer or fall. Who is harvesting winter wheat in the fall? Even here in snowy Canada it's a late harvest if the winter wheat comes off in August. Mid-July is typical. Spring wheat is a different story.

Hmm. The page I linked shows Idaho, Minnesota, Montana, Oregon, Washington, and Wyoming with a harvest season extending into September. But other than Idaho (Sept 14) not by much. So technically I might be right, but only in the same way that "Spring" is also correct for the deep South.

I had assumed that most of Canada would be later than the Northern tier of the US, but apparently I'm wrong. I wonder if it's because the summer days get longer the farther north you go, and at some point you actually get earlier ripening? Or maybe it's all local weather. In any case, thanks for the correction.

Re: Missing wheat from the war is less than 1% of global wheat crop

#156

Post by nkurz »

log1_aa wrote: post #142
randomdata wrote: post #56

Earlier quoted context omitted.

> This aligns with every single combat photo I've seen thus far. I don't think I've seen one field of winter wheat. 1. How many photos from the war have you seen of farmland? It's not exactly the prime battleground. 2. We can assume that you can recognize winter wheat at this stage from photos not focused on the crop? It, of course, looks like someone's dead lawn when it first emerges from it's winter rest. Hard to d…

The photo shows pasture land, not winter wheat. The wheat crop in Ukraine is almost 100% winter wheat that is planted in the fall. Source: https://www.fas.usda.gov/sites/default/files/2022-03/Ukraine...

I was going to ask you when it is typically harvested, but thought I'd check the page you helpfully linked:

Winter wheat accounts for about 97 percent of Ukraine’s total wheat production. It is planted from early September to mid-November and harvested between July and September.

So depending on what happens with the invasion, it seems possible that a substantial portion might still be harvested on schedule.

Re: Missing wheat from the war is less than 1% of global wheat crop

#157

Post by ineedasername »

Dylan16807 wrote: post #150
jacobolus wrote: post #73

Earlier quoted context omitted.

Grain is shipped in large specialized dry bulk cargo ships. It’s a lot closer to ship from Ukraine to, say, Egypt than to ship from Australia or Canada or even India. If you ship your grain N times farther, you need N times as many ships to make the same number of trips. Those ships don’t exist or can’t be mustered on short notice, so you have to use some other kind of (less-specialized, less efficient and more expen…

> If you ship your grain N times farther, you need N times as many ships to make the same number of trips. Which would be really bad if it was a global increase, but when it's a tiny sliver of the market you only need a sliver of spare capacity.

>you only need a sliver of spare capacity

If there was spare capacity, but there doesn't seem to be much at all. 1 in 10 inter-country wheat shipments will be Ukrainian, and it's about 1 in 7 for corn, probably other crops as well. Repurposing that shipping capacity isn't easy either, from a logistics standpoint. It can take up to a month just for a ship to cross the Pacific, before any other route complexities. It doesn't help that there's over 100 such cargo ships tied up in Ukrainian ports either, a decent proportion of which will be the subset of cargo ships fitted out for bulk grain transport.

The last few years have already shown us how delicate the global logistics & supply chains are. It doesn't take much to stretch them near to the breaking point, and we're already close to that point.

Re: Missing wheat from the war is less than 1% of global wheat crop

#158

Post by pempem »

pempem wrote: post #14
awb wrote: post #13

Earlier quoted context omitted.

The author frames the problem less as a wheat production problem and more as a shipping problem. > Again, specific places are facing EXTREMELY REAL wheat supply problems. MENA usually sources from Ukraine. Switching supply chains to India & other sources takes extra time, & if they're further away from India and Ukraine, it takes longer for supplies to get there. FYI, MENA = Middle East / North Africa > What these pl…

A sincere question: Would it not then be helpful to support these new or temporary supply chains as a war effort? Shouldn't that fall under humanitarian aid?

Yeah...I was thinking ships from India and trucks from the east for example.

Re: Missing wheat from the war is less than 1% of global wheat crop

#159

Post by pempem »

stubish wrote: post #137
pempem wrote: post #14

Earlier quoted context omitted.

A sincere question: Would it not then be helpful to support these new or temporary supply chains as a war effort? Shouldn't that fall under humanitarian aid?

I think China may step up here, as it is a great opportunity to promote their One Belt, One Road Initiative. And they will be one of the countries with excess wheat to sell. And it will make Australia look stupid if they have wheat but no boats and no signature on the agreement.

Another step up opportunity for China would definitely be problematic for the US

Re: Missing wheat from the war is less than 1% of global wheat crop

#160

Post by pixl97 »

Robotbeat wrote: post #49
bell-cot wrote: post #21

Earlier quoted context omitted.

If the shortages are in rail lines, grain elevators, shipping terminals, bulk cargo ships, etc...no sort of "support" can create those at all quickly.

Trucks. Lots and lots of trucks.

Not sure about the EU, but the US has a massive truck driver shortage already.
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