As we know, wheat and other cereals have been enjoying a healthy period of a price growth over the last few years, and at the time of writing it is at a peak not before seen.   So TheCityFarmer aims to explain some of the possible causes.

There are a number of factors that can shed light on the increase illustrated in the chart below.  Often commentators will cite the difficult harvests experienced by those in important cereal producing nations such as Australia.  While this has, no doubt, made a contribution to the price by squeezing supply, it does not offer a long-term explanation.  

Feed Wheat Price Chart

To predict that the recent rises will be sustained into the long-term one would have to be able to point to some structural factors having a material impact on the forces of supply and demand in the market.   While measuring the magnitude of the affect is a vastly complicated matter that would require a great deal more inquiry than we can muster on this blog, TheCityFarmer is confident that there are forces, which are still in their early stages of development, which could indeed have the material impact required to sustain or even continue to drive up prices.  So what are they?  Feel free to leave your opinions in the comments field, but TheCityFarmer’s answer will have to wait for the next post which will be soon-coming.

—-

Part II of this post is now available here.

Advertisements