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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

#71

Post by danuker »

webmaven wrote: post #55
Robotbeat wrote: post #49

Earlier quoted context omitted.

Trucks. Lots and lots of trucks.

Leaving aside the issue that trucks can't move stuff across oceans, how do you get the extra trucks to where they are needed?

As a Romanian I visited Lviv a few years ago. There were some disaster potholes right past the border. It took 1 hour to go through say, 10km with a small car. Unless those roads get fixed, I expect only military or otherwise rugged trucks to be able to pass quickly. Otherwise, you'd need a lot of trucks to get a significant flow of goods.

Example:

https://www.google.com/maps/@48.0388842,22.9469939,3a,75y,33...

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

#73

Post by jacobolus »

ineedasername wrote: post #68
mooreds wrote: post #4

Earlier quoted context omitted.

If the shortfall in exported wheat is ~1% of global production, and farmers in other countries (India, USA) already are planting more to make up for it, what is preventing Egypt and others from importing from those other countries to replace Ukraine/Russian exports? What am I missing?

>What am I missing? Shifting suppliers on this scale in normal times isn't a quick process. Right now global logistics are still a complete & total mess. With great uncertainty, $cost becomes somewhat disconnected from supply. Right now futures are up about 40%. Availability won't mean much if it isn't affordable, and countries need to lock in supply because it's not really a JIT distribution system (see previous poi…

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 expensive) shipping.

Even if you can manage to get all of the grain where it needs to go on new routes, the price of grain is going to go up substantially in places previously importing from Russia/Ukraine, and the logistical changes will cause second-order disruptions to other global shipping.

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

#74

Post by firstSpeaker »

Reading this made me very happy. I was seriously scared and low thinking about 25% shortage of wheat. I hope this closer to reality than the 25% claim(short term considering fertiliser supply issue in the future?). This is the type of news I hope to read more often these days.

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

#75

Post by randomdata »

nkurz wrote: post #46
Loughla wrote: post #8

Earlier quoted context omitted.

So spring wheat is harvested in the fall, and won't be planted for a little bit in the US, because it's just now starting to get to spring in many states. Winter wheat, which would be harvested this spring, should've been planted months ago. So there's a gap in production, regardless of where they get their wheat from, I guess is what I'm trying to get at.

> 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.

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

#76

Post by randomdata »

prostoalex wrote: post #30
mooreds wrote: post #4

Earlier quoted context omitted.

If the shortfall in exported wheat is ~1% of global production, and farmers in other countries (India, USA) already are planting more to make up for it, what is preventing Egypt and others from importing from those other countries to replace Ukraine/Russian exports? What am I missing?

> and farmers in other countries (India, USA) already are planting more to make up for it Are they? Fertilizer prices are up 3x-5x, depending on where you look, due to Russian export restrictions, so for many farmers it's cheaper to wait it out and give the soil a rest. Planting reports have only started trickling in, so we don't have a good global view of what has been planted in spring 2022.

> so for many farmers it's cheaper to wait it out and give the soil a rest.

If you play your cards right, and Mother Nature plays nice, this could be the most profitable year of farming seen in a long time. Costs are up, yes, but the income potential is up even more. Why would anyone choose this year, of all years, to "give the soil a rest"?

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

#77

Post by ineedasername »

jacobolus wrote: post #73
ineedasername wrote: post #68

Earlier quoted context omitted.

>What am I missing? Shifting suppliers on this scale in normal times isn't a quick process. Right now global logistics are still a complete & total mess. With great uncertainty, $cost becomes somewhat disconnected from supply. Right now futures are up about 40%. Availability won't mean much if it isn't affordable, and countries need to lock in supply because it's not really a JIT distribution system (see previous poi…

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…

Thanks for the added detail-- I wasn't aware of details specific to the Ukraine Egypt supply chain, and this demonstrates extremely well the difficulties of shifting supply sources.

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

#78

Post by cs702 »

A 1% decline in supply can have an enormous impact on price, because price is set at each instant by the marginal buyer and seller.

For every 100 buyers (people) used to buying (eating) wheat every day, there is now only enough wheat for 99, on average. Wheat prices will therefore rise until 1 out of every 100 buyers cannot afford to buy their usual daily purchase of wheat. On average.

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

#79

Post by c1ccccc1 »

csee wrote: post #16

I quickly googled what the annual wheat exports from Ukraine and Russia are and got a much bigger number than the tweet suggests.

I googled as well. Ukraine exports were ~ 20 million tonnes. The tweet says the expected shortfall is ~ 7 million tonnes, probably because Ukraine is not expected to lose all of their production. If they did lose all 20 million, then the fraction would be 20 million / 778 million = 2.6%. Total production (including that consumed locally) is about 25 million, so if all of that were lost, the overall difference would be about 3.2%.

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

#80

Post by kqr »

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…

Note that derivatives like futures add additional layers of emotion over the cash market.

In the cash market, prices are generally set to match supply and demand of the actual physical thing. Supply is what it is, and demand can go crazy in mysterious ways.

In a derivatives market, prices reflect the supply and demand of promises and expectations of the physical thing. You're buying and selling a completely abstract entity only loosely coupled to the physical thing. Here both supply and demand are driven by all sorts of mysterious whims.

Not to mention that derivatives markets tend to be designed for speculation.

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