A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

Agricultural markets subject to the volatility of
financial players’ expectations

February 13, 2012

In early February, European wheat prices reached a record high for the past seven months, driven by fears connected with the cold snap that is hitting Europe and the threat of new Russian export restrictions.

Even if it is difficult to measure its real impact today, the cold spell could indeed lead several countries to a loss of a significant share of production. According to an Agritel official, Ukraine could thus lose the equivalent of 30 to 35 percent of its wheat farmland.

An announcement by Arkady Zlochevskii, President of the Russian Grain Union, also contributed to foster tension in markets, when he stated that Russia has already exported over 19 million tons of grain since the start of the season, thus getting close to the 25 million limit set by the Government.

Once again, such factors prove that agricultural markets have become complex expectation markets whose strategic dimension is mounting. As we noted in a previous article1, it is not so much the effective implementation of the 2010 Russian grain embargo that triggered the price hike recorded that summer, but rather President Medvedev’s mention of a possible grain embargo a few weeks before.

So, the scope of agricultural price volatility is no longer caused by imbalances between supply and demand on physical markets, but by expectations made by the various players2 active in these markets––producers, agricultural cooperatives and investors among them––and their resulting market positions, which are irrevocable for farmers as they decide on their crop rotation.

1 Please see momagri’s article “The “Weather Market”: when speculators play with the weather”, http://www.momagri.org/UK/a-look-at-the-news/The-Weather-Market-when-speculators-play-with-the-weather_899.html
2 Please see momagri’s article “The psychology of financial players and agricultural price volatility”, http://www.momagri.org/UK/a-look-at-the-news/The-psychology-of-financial-players-and-agricultural-price-volatility_1032.html

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Paris, 26 April 2019