Separating the Wheat from the Chaff

First, wildfires damaged wheat crops in Russia, prompting the government to ban exports. Next, heavy rains reduced Canada's wheat crop outlook to its lowest level since 2002. Now, massive floods in Pakistan are threatening to turn Asia's third-largest wheat producer from a wheat exporter to a net importer.

Growing concerns about wheat shortages worldwide are sending prices soaring, making it clear that agricultural prices have entered a new age of volatility that is increasingly influencing companies' earnings. One of the surprising factors driving this shift is the rising frequency of agricultural shocks, as the number of extreme weather events has tripled since 1980.

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