Physical Economic, and Political Feasibility for Trade of U.S. Grain for Russian Oil

摘要

World crude oil prices have reached near historic highs while grain markets remain at basically the same levels as in the mid-twentieth century, even without adjusting the dollars for inflation. In real dollars grain prices have receded to lows unseen for decades. The former Soviet Union was once a buyer of U.S. grain, and from an economic perspective Russia could now be an even bigger buyer of grain. This study examined the feasibility of trading U.S. grain, such as wheat and corn, for Russian crude oil. Physical, economic, and political factors were examined. From a physical perspective the possibility of utilizing the same ships to move the commodities both ways was examined. The cost of cleaning the ships to handle grain after crude oil proved to outweigh the alternative cost of deadheading. Economic factors considered Russia's immense land mass and the possibility of trade between Russia's eastern ports and the west coast of the United States. Political factors included Russia's instability, and the lack of a central authority to effect an agreement to trade such dissimilar commodities. Also, a lack of trust between the management and banking interests of agribusiness and the oil industry impedes any agreement to trade.