Russian Drought Affects Wheat Supply

6 03 2011


The Russian plains have been hit by a drought, and will be not reaping the wheat expected of them next harvest.  The Russian government has also put a ban on wheat exports.  This is causing prices to rise due to a decrease in supply.  The supply determinants at work in this scenario is a change in the number of producers, as well as a change in producer expectation due to the drought.  The article states that, even though framers in the Midwest and France can make up for the lost supply, prices will continue to rise as middlemen change their pricing to cover new costs, like those of shipping.



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