from Aditya Kondawar | by Aditya Kondawar

Story Time - How a bunch of Trading firms in the US sold way too much Wheat in the summer of 1972 and the common man had to pay the price – An episode dubbed as the ‘Great Grain Robbery' t.co/fnAKpRamXF

1/n Nikolai Belousov, the head of ExportKhleb, the Soviet government agency in charge of trading grain arrived in New York in the summer of 1972 Cargill didn’t think twice about working with him

2/n In a meeting at the Hilton with Walter Barney Saunders, Cargill’s head of grain trading, Belousov negotiated a deal to buy two million tonnes of US grain over the course of the next year It seemed, at the time, like a good deal all around

3/n But Cargill was in for a shock When Belousov arrived in New York, he had called not just Cargill, but every single one of its rivals Each of the trading houses sprang into action Cargill’s competitors immediately flew to New York from as far as Paris & Buenos Aires

4/n Many remembered the sale of 1963 when the Soviet Union had bought $40 million of grain from Cargill But this time Moscow was aiming for much more: a drab Soviet bureaucrat was about to conclude the largest deal in the history of agricultural trading

5/n Belousov negotiated with each of the largest grain traders Before meeting Cargill, he met with Michel Fribourg, the president owner of Continental Grain to buy $460 million of American wheat + other staples - This was one of the largest commodity trades that was ever done

6/n Later he met with Louis Dreyfus, Bunge, and Cook Industries. He bought from everyone. Each trading house thought it was alone in cutting a big deal with the Russians, largely unaware of how much others had sold

7/n When it became clear how much Belousov had bought, traders realized there wouldn’t be enough American grain to go around. In total, Belousov bought ~20 million tonnes of grains and oilseeds from the grain traders. The size of the wheat purchases was extraordinary

8/n 11.8 million tonnes was equal to 30% of the US wheat harvest When the market woke up to the sale, it was clear the US wouldn’t have enough grain to meet the combo of its own domestic demand, demand from traditional importers & the extra purchases from the Soviet Union

9/n Wheat, corn, and soybean prices raced higher, triggering food inflation that Americans hadn’t experienced in a generation Just before the Russians started talking to Continental, milling wheat prices in Kansas were 1.44$ a bushel; within 10 weeks, the price had risen 60%.

10/n Worse was to come: in the year after the Soviet deal, wheat prices tripled. Corn & soybean prices also climbed. With grain prices rising, the price of meat shot higher too. The public was outraged. The episode became known as the ‘Great Grain Robbery’

11/n Book Src – The World for Sale by @JavierBlas