The calm before the increase...

Earlier this year in January, Southern Europe experienced a series of extreme weather events.  Drought, excessive rain, followed by wind and subzero temperatures resulted in the loss of 80% of produce for Europe.  The demand for produce resulted in shortages and eventually produce became unavailable. Prices initially doubled then tripled.  These events are chronicled in a summary given to the a committee I presented to at the end of may.

In May of this year, a spring snow storm resulted in loss of almost 25% of the total American Winter Wheat crop which resulted in an 7% increase in wheat futures, meaning an eventual price increase.  In June of this year, there was an 8.5% increase in futures after the Canadian outlook was released and estimates were falling as a result of the ongoing drought.  Current Alberta Crop estimates are showing that across the board, crop estimates are 13.4% below averages.

World wide grain estimates for this coming harvest are going to be well short of averages.  This is reflected in the crop report by the United Nation's Crop Prospect and Food Situation report which show a decrease of world wide crop production by about a half a percent while utilization of this food for consumption is at an all record high.

This breakdown of events is illustrative of how a price increase occurs and this has a cascading effect into other industries.  Grains are used in every level of production, from feed for livestock to flour for foods.  The Food and Agricultural Organization of the UN's Food Price Index shows that prices for foods have risen 7% from last year.  For the savvy shopper, the best time to buy in bulk is now before the price increases take hold.

​Derek