Holy wheat bubble

Posted Sep 25th 2007 2:05PM by Eric Buscemi
Filed under: Products and Services, Commodities

The price of wheat says it all. Terrible drought conditions in Australia and poor supplies from Canada are driving prices for the crop through the roof.

This is occurring while demand is soaring as Iraq recently imported 700,000 tonnes and Algeria took in 100,000.

While prices are also being impacted by typical seasonal demand, there are plenty of buyers who put off purchases waiting for prices to moderate, which could keep prices high for awhile.

However, with that said, this is one commodity where the rug will be pulled out from under investors' feet. This looks like a short to this blogger.

Tags: bubble, commodities, demand, drought, inthenews, seasonal, Wheat

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Reader Comments (Page 1 of 1)

9-25-2007 @ 3:00PM

Steven Danis said...

I'm also distrustful of anything that goes up too much too quickly. But upon what basis are you making the case that wheat of necessity is going to fall dramatically in price? Right now demand is outpacing supply worldwide, with reserves lower than at any point in the last 30 years. The only country with really large stocks to sell to wheat deficit parts of the world is the United States at this time. The foods made from wheat: bread, noodles, pasta, etc. are about the cheapest things that anyone can eat, so poor people or the more affluent looking to eat as inexpensively as they can have nothing to substitute that would be of lower cost. And since none of us knows what the weather will be, which is the primary determinant of supply as well as acreage, your opinion that wheat is going to fall just because you say so isn't what I would call useful investment advice.