Contrary to the dismal barking of Big Agbiz, the United States – and any nation with enough money – will not run out of food this year.

This can be said without reservation for two reasons.

First of all, war or no war, there is no global wheat shortage, today’s harvest, the Chicken Littles are giggling. During the last week of March, many sources pointed out that the estimated shortfall in Russian wheat export sales due to its war in Ukraine would be around 7 million metric tons this marketing year.

While that sounds like a lot, 7 million metric tons is actually 0.9% of Russia’s staggering 778 million metric tons wheat crop in 2021.

So, no, the loss of less than 1% of a country’s agricultural production in any commodity will not lead to global famine.

The second reason why the world will not run out of wheat is that, when functioning properly, markets operate openly and transparently and prices ration supply and demand. Yes, it can be very expensive, but it also ensures that the global closet never truly empties.

And that’s what happened in the wheat futures market from mid-February to early March when Russia invaded Ukraine. On February 18, a week before the invasion, Chicago May wheat futures prices were $8.04 a bushel. After three weeks of volatile, war-fueled trading, May futures had soared above $12.

On March 8, however, the May contract shot up to $13.63 a bushel just as futures trading began that day. Soon after, something – or someone – hit the market and May futures fell $2 a bushel. By the end of the bruising session, prices were back to $12.86 a bushel, almost exactly where they had ended the day before.

What happened?

No one really knows and, worse still, it is likely that no one will ever know because the main regulator of the futures markets, the Commodity Futures Trading Commission – like many government agencies over the past decade – has entrusted most from its watchdog functions to the markets themselves, notes Steve Suppan of the Institute of Agriculture and Trade Policy in Minneapolis.

In a prescient March 16 article on the institute’s website titled “Wheat Futures Prices and the War on Regulation,” Suppan describes the long anti-supervisory game that most futures markets have played with Federal watchdogs after post-2008 laws gave regulators greater power to oversee markets. .

That fight culminated in a 3-2 vote at the end of 2020 by the five-member board that relinquished “virtually all (Commodity Futures Trading Commission) authority over the exchanges…” One of two dissidents from the panel, Suppan notes, said the change makes “the players on the field the referees.”

“In this area”, however, “the public interest loses.”

It’s hard for the public to see this because futures markets seem to be obscure exchanges where taxi drivers become millionaires by buying soybean futures. Not if – ever.

The U.S. futures exchanges are a $610 trillion-a-year market where speculators – traders looking to profit – and hedgers, typically buyers and sellers of commodities or derivatives of exchange-traded products , meet to set a price based on key ingredients like supply, demand. , weather and war.

And they are of crucial importance in our daily life. If markets don’t work fairly, everyone pays – from the shopkeeper who’s fallen victim to a shady deal to the single mother of five struggling to pay the weekly grocery bill.

Farmers and ranchers know this. In fact, today’s wheat market volatility means that some rural grain buyers only buy farmers’ grain when the Chicago futures market is open, so the buyer can immediately transfer their risk. property to someone else.

It also means that these buyers do not offer any farmers a market after 1:15 p.m. every weekday and not at all on weekends. Almost any farmer or rancher will tell you that this is a very risky and potentially costly failure for you and them.

So, no, we’re not going to run out of food. The real threat is that we will run out of markets we can trust.

The Agriculture and Food File is published weekly in the United States and Canada. Old chronicles, supporting documents and contact details are published on farmandfoodfile.com.