I saw a few interest articles out there, and the most interesting thing about them is what ties them together.
The Russian-Ukraine war sucks. Besides unnecessary death and destruction, and the underlying need for greed and something else, there’s some new details emerging. Since this war is prolonging by the day, which might be good for Ukraine and bad for Russia, it’s also apparently bad for a few other things.
Russia and the Ukraine produce a ton of global commodities. Besides the useful deposits of nickel and rare earth metals-Ukraine is also abundant in gas/natural gas and other minerals. This was probably seen as another reason Russia wanted control of Ukraine-as well as running pipelines through it to Europe, it could control a wide swath of industries and have political control. But there’s another commodity there that both Russia and the Ukraine produce and that’s wheat. Ukraine also produced a lot of wheat too, so they’re kinda in the same boat here. So besides energy, we’re now approach food crises problems, YAY!
Now, this may not be as interesting or as sexy as global control of gas or something like that, but Russia apparently produces up to 30% of the world’s wheat. With China’s fields faltering due to floods, it needs to buy up crops, and other countries that traditionally bought from Russia and Ukraine, Since there’s a blockade on Russian goods and Ukraine is having a blockade of it’s own right now, a significant proportion of wheat is being kept off the market. Combine that with China’s problems, and you’re going to have a run on wheat. The US also produces a lot of wheat which would possibly benefit-our farmlands and whatnot-but producers are not buying due to CONTRACTS AND SPECULATION ON COMMODITIES. This is also exactly why they regulated commodities way back in the stock market crash of 1929-since people trading on margins for things that you know, we actually use and eat, is a bad thing.
Brief review: trading commodities is BAD because when you trade those commodities, someone is actually going to be left holding that object from the producer. Trading stock in general is buying up stock (a piece) in a company and then benefiting from the company’s general business to go up and down. When you trade in commodities-you’re trading for the value of a barrel of oil, or a bushel of apples, potatoes, etc. Most people don’t truly associate the fact that when they’re investing in oil, they’re actually going to be on the hook for a full barrel of oil. A single barrel has no way to be produced-you need to get it to the refinery to turn that into gas and etc. Just like a bushel of apples, which would require you to sell it to a supermarket or to people individually. Since most traders don’t have that function available to them and it becomes cost prohibitive, AND since people trade on margins and FUTURES (bets, basically), the ability to turn a bushel of apples from .50 cents a pound to 50 bucks a pound is awfully tempting for people financially. It’s NOT so tempting to those people who are trying to buy apples to actually eat. Let alone anything that you need to SURVIVE. Hence the fact that we outlawed speculation/futures trading on those goods so that, you know, greedy people couldn’t take over the world’s apple supply and make it so that apples are impossible to get (maybe besides banana republics). Or oil or gas or potatoes or maybe any of the really important things that society needs. Since 1980, the government and big business has been slowly deregulating the markets to open futures trading and more to financial institutions. This quote comes from 1997-“GFOA believes that deregulating commodities futures exchanges could put public pension funds and other state and local government funds at risk” (that’s just pensions by the way, not even just pure goods we rely upon. and those pensions now? good luck, your 401 is probably not much better either)
SO! Let’s get back to Ukraine and wheat. Not only do we have a bad situation in the fact that we had unregulated markets basically salivating over the fact that they’re ready to try and make money off the global misery that comes with war-they’re going to try and ruin their own local markets by bag holding and waiting to push the price of wheat up until it begins to hurt the bottom line-which is basically the consumers.
“Though spot CBOT wheat futures have cooled in recent days, slipping back below $11 a bushel, the futures market has not been this volatile since 2008, when food shortages worldwide sparked riots in some countries.”
You realize that the price creep we’ve had since covid hasn’t all been purely because of covid, right? Right, because this is another way that big business is trying to operate to increase the margins of profit, except this is on something that people TRULY need. So far we’re up almost 10% of inflation on food alone. Matter of fact-if you haven’t looked, most of the riots/protests/true changes in history come about when the food supply is threatened. Most of the world is food-risk, and most of the world will begin to feel those price changes pretty quickly when the cost of bread and other basic food goods skyrockets because some suits wanted to capitalize on instability.
Let them eat cake-whether truly or not truly attributed to good ol’ Marie, is a bad rallying cry for those corporations that are going to have a hand in creating commodity shortages by having silos full of wheat spoil because they want to hit the right price and make enough money from it. That’s basically it-by the way-in that silos FULL of wheat will spoil because producers and other buyers are not distributing the goods, but waiting for the margins to meet their demand interests. That’s fine and dandy for just about everything that people don’t necessarily NEED, but a terrible policy for things that people HAVE to have in order to survive. And since the erosion of the middle class is at hand, there’s going to be plenty of more hungry people in the streets.
“You know when they show the cars jumping in slow motion and the passengers inside are up in the air? That’s what it feels like,” he said. “We’re all just kind of suspended in the air, waiting for the car to land. Who knows if it’s going to be a nice, gentle landing or if it’s going to be a nosedive into the ditch.”
That’s the quote from the NY Times. I think I have a pretty good idea where these companies are going to land the car, and it’s not the best option. Too bad it’s not only just them that gets hurt along the way.