2010 Kansas Wheat Crop just before harvest
You may have seen the yesterday's articles in the Wall Street Journal and Bloomberg about the surge in wheat prices due to the Russian drought.
There are a couple of ways to look at this: Yes, bread prices might go up. But, the harvested wheat in Kansas gained about $500,000,000 in value that farmers can use to take vacations, spruce up their homes, etc. Since much of the money will be paid by foreign buyers, the additional monies will, on balance, improve the U.S. balance of trade and improve the U.S. economy.
That said, there are reports that the Russian drought -- the worst in more than 50 years -- will threaten fall planting if it continues. That raises the possibility of a worldwide grain shortage. I'll keep an eye on this and post updates as appropriate.
UPDATE: 10:15am, Wednesday: AccuWeather has a story about the Russian drought here.
UPDATE #2: 11:20pm Wednesday: As if the above isn't scary enough, read this. It is the latest on the serious threat of wheat rust.