There is the adage that all politics are local. This may also be true of commodity markets. The grain markets are a perfect example. In the summer of 2010, there were significant grain shortages because of severe droughts in many key growing areas and strong demand from emerging markets. Russia placed an export ban on grains as it was hit by one of the most horrible droughts in their history. The bottom fell out of the Commonwealth of Independent States as a supplier of export grain when the bans went into effect. World grain importers were sent scrabbling for supply causing even further price increases. Local effects have global implications.
In the 2011 period, there was a complete turn around in the fortunes of grain. Exports from Russia have surged from 4 million tonnes in 2010 from the previous year of 18.6 million tonnes. Now exports are back up to 14.8 million tonnes and growing. However, there may be a cap on how much will be exported as importers destock.
Supplies are up from the lows of two years so the local growing success of key regions has translated into the global market. There is a reason to focus on local events.
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