WEAT

I’ve taken a significant position on WEAT, a commodity futures ETF for wheat. Most of the world will experience food shortages next year. The reasons are for the following:

  • 1/3 Pakistan under water and likely not able to start their food growing
  • Drought in the Western United States
  • India banning wheat exports due to food uncertainty.
  • Ukraine’s output continuing to dwindle as a result of the war as it is one of the primary producers of wheat.
  • Russian fertilizer shortage due to sanctions will affect Brazil, a major producer of food. Also, African countries rely on fertilizer to generate enough food for their population
  • China also banning its export of fertilizer as it still deals with the African swine fever which is having China buy all foodstuff from the global market to regrow their herd.

All of these conditions are pointing to a 2023 with conditions set for a famine that will likely be included in the next “Old Testament.” (The thesis for this investment is also based on human misery and for that may the gods have mercy on me.)

The question then becomes why hasn’t WEAT taken off? It seems to have taken off right after the start of the Ukraine war but has fallen back. The reason is that the contracts for wheat for 2022 are based on fertilizer and inputs from 2021. We have not priced in wheat from the inputs of 2022 conditions and in general the crop haven’t even been planted yet (if it will in terms of Pakistan).

I hope I am wrong and maybe the United States will step in but it doesn’t produce enough to feed a billion mouths.

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