Bread Prices Are Expected To Skyrocket Because Of Russia’s Drought And Putin’s Edict To Cut Off Grain Exports

[caption id="" align="alignleft" width="335" caption="Bread"] photo credit: kathryn in stereo[/caption]

The Guardian is reporting that governments, especially many in Europe and other poor countries are preparing their people for a steep rise in the cost of bread and other wheat related products.  This increase is expected because of the severe drought in Russia, which produced much of the wheat that makes its way to Europe. The drought coupled with Vladimir Putin’s deliberate banning of Grain exports are the catalysts for this projected rise in the cost of wheat related products, including one the most important staples, bread. The increase in wheat prices is the highest in 37 years and the countries in poor countries are about to feel the financial impact.

Because of the freeze of grain exports by Russia, one of the world’s leading producers of grains, governments in these importing countries are expected to purchase the available wheat on the market, and therefore, further drive up the cost of wheat related products. Wheat analysts say that the 1973 wheat shortage caused the price then to skyrocket some 87% - it doesn’t help that there is a worldwide recession currently making the rounds. The massive increased of wheat production responsible for the cost of cheap bread, much of the world has become dependent on the cheap grains coming from Russia, even though the grains are less dependable than those grown in the more stable weather found in North America.

No one knows when the wheat production and exports will resume in Russia – in addition to the drought, there are fires burning out of control and contributing to the dire situation. It is a given that the rest of the world will turn to purchase the wheat grown in North America, which means that we should expect our grain related products to see a palpable increase. No doubt that in the coming days, those who own wheat futures will be enjoying a hefty profit, but many of the poor will be feeling the pinch – perhaps, there are tons of grain in our silos, which could make up for the current or pending dearth.