Wednesday, August 4, 2010

Burning Russian Wheat and Higher Prices

Russia is on fire.

The wheat fields, that is. It is the hottest, driest summer ever in western and central Russia, and the dry weather has already ruined about one fifth of the Russian wheat crop. Now fires are popping up and burning some of the wheat fields that had survived to this point.

It makes the situation worse that Russia does not have much experience with this kind of fire. But even if they did, with fires popping up at the rate of 300 per day, firefighters cannot get to all of them, at least not right away.

With the drought and fire damage, Russia will be harvesting much less wheat than usual. Normally, Russia is one of the world’s largest exporters of wheat, but it may not have any more wheat to export this year. Other countries will be looking to buy more wheat from Canada and the United States. The price of wheat will be higher everywhere.

The bad news for farmers whose crops were lost is good news for wheat farmers, everywhere and especially in Russia, who have crops to harvest this year. People who eat wheat products may pay higher prices — but not much higher, because wheat is still not expensive.