Grain shipments stalled due to credit crunch

Financial Post

"There's all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit," said Bill Gary, president of Commodity Information Systems in Oklahoma City. "The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy."

So far the problem is mostly being felt in U.S. and South American ports, but observers say it is only a matter of time before it hits Canada.

"We've got a nightmare in front of us and a lot of people are concerned it's going to get a lot worse," said Anthony Temple, a grain marketing expert based in Vancouver.

Grain. Wheat, corn, rye, rice, barley...all grains. Think about how much of your daily diet relies on grain or grain derivatives.

If our grain shipments are being halted or delayed due to credit issues, the credit crunch is rapidly expanding from bank-to-bank lending to something that effects us every single day.

Speaking as a baker by trade - my flour prices just came back down to reasonable levels in the past few months. Late last year problems with the wheat supply and increased shipping costs found my flour doubled in price, which hurt me both at work and at home.

If the credit freeze continues, if such basic, life-sustaining goods like grains are notably impacted, we're in for a serious world of hurt.

[edit on 10/8/2008 by anachryon]

I had better plant as much as possible. I do feel your pain, and hope that you are well supplied because no matter what, people are going to be hungry. You have a good job. An important job.

The problem is not one of credit, although I credit you for wishing to believe this problem is material and therefore suceptable to direct action.

It started as a problem of trust. It remains a problem of trust. They have patched the credit reaction and the trust action which caused it remains.
The resultant decline of civilization world wide also remains in motion.

For example, lets say you are a lender and a large sum of cash makes it's way to your hands for lending right now. There is the ship full of grain. A sure bet you might think. Not so.

You deliver the ship to the small fictional nation of "Reliance". You are paid for your shipment over time. Will they be able to pay for the shipment, or will you loose everything to the financial collapse of the nation of Reliance?

Suppose Reliance is the most stable nation in the world. How can you loose? Well they pay you off for your load with next year's dollars.

How much will next years dollars be worth?

The US government just set the world into a state of hyper inflation. Chances are you still loose. Right now you have something real, something tangable, you can eat wheat. You can hold it, it remains wheat, Wheat does not hyper inflate.

This is the problem we now face. The problem of Trust in each other's ability to control our lives sufficiently to repay a debt.

The problem of trust in the machinery of society to benefit us by letting go of what has real value now for anticipated value later.

The trust is gone.

What department of the government do you go to to have your trust restored?

What institution has a vault full of trust right now?

We live in a global economy driven by credit, and credit only works by the power of trust.

All transactions will now tend to tighten to a state more close to barter than credit. What will be left of civilization after that change? An industrial society cannot work on a system of barter. Specialization prohibits the ability to barter for all needs.


The world is looking upon our politicians and seeing the degree of corruption we have brought into the foundation of the worlds economy. Our own people no longer trust our government, why would any nation which is being dragged down trust US?

The US is rapidly becoming a pariah in the world community. Long after others have established a new order of trust among each other, we will remain untrustworthy.



[edit on 8-10-2008 by Cyberbian]

its not clear, is it grain shipments to the US or from the US?

its liek a virus. One sick problem leads to another problem. Once the first problem is corrected its already spread to another place. Its the bird flu of economics. haha