posted on Aug, 1 2009 @ 01:29 PM
Well, this may explain a few oddities I've heard recently.
All of the stores in my area have been limiting bulk rice & grain purchases to 50lbs per family per week. Apparently this must be a Distributor based
thing because all of the restaurants in my area have been screaming about the rice & grain rationing adversely impacting their ability to do
Even though we are a large producer of wheat we do have Farm Subsidies to protect farmers when the value of particular crop falls below commodity
rates we pay the farmers to destroy that crop that they've grown.
In the past 10 years Wheat Subsidies have grown higher than corn, oats and barley which have traditionally been the highest recipients of Farm
Subsidies. The US has drawn international criticism, even from Canada, Australia, the EU, and the WTO for the "Strategic Subsidies" the U.S. Export
Enhancement Program (EEP) has been giving to Wheat Farmers to artificially inflate Wheat Prices on the International Market.
The U.S. routinely provides in excess of $1,000,000,000.00 a year to Wheat Farmers alone to destroy their wheat crops.
For the fact that we are the 4th largest producer of wheat, but the number 1 exporter of wheat, this all of a sudden makes sense, especially in the
current Economic Crisis.
Last year the U.S. exported 27.6 million metric tons (MMT) of wheat, which is about 41% of what was produced in the U.S. World trade in 2008/09 was
136 MMT so the U.S. accounted for nearly about 20% of all the world's wheat exports. By comparison, in 2007/08, the U.S. exported 34 million metric
tons, comprising 30% of world wheat exports.
So, last year our Market Share dropped 10% and we exported 6.4 million metric tons of less wheat than the year previous. This year, our exports of
wheat to date have dropped dropped 47% from last year. That's less than 12 MMT!
To keep the amount of Revenue from Wheat Exports the same as it was in 2007/08, the U.S. strategically creates an artificial shortage of Wheat in
2008/09 by boosting Wheat Subsidies to U.S. Wheat Farmers who must destroy their crop. This costs the U.S. @ $1,000,000,000.00 but increases the value
of our Exports significantly to where the remaining wheat that we have to Export is still valued at $16,000,000,000.00. As demand for our Wheat
Exports in 2009 has fallen 47% we need to boost the value 47% to make the same.
To any skeptics that this strategically forced Wheat Shortage isn't having an effect, just since that article posted by the OP was released, the
value of U.S. Wheat Exports have reached $5.30/bushel, or a 2.3% gain in value in just 7 Trading Days! The more pronounced the Wheat Shortage becomes,
the higher in demand it will become and the value will continue to increase.
This is the same old U.S. Economic Protectionism we have played for the past 10 years in the Wheat Market.
What it means to us is that
a.) Wheat prices will be at an all time high in the U.S. meaning a loaf of bread will be unbelievable in cost.
b.) consumers *WILL* feel the wheat shortage because there really is one, albeit artificially manipulated by the USDA and the U.S. Export Enhancement
Program. The more consumers feel the shortage and panic, the higher it will drive up the value of wheat.