It was an interesting week, to say the least. Whether we’re talking about wheat in particular, the grain complex, commodities or the state of all markets around the world, this past week was one of political unrest that began to boil over and the reaction of the broader markets was to move to safety.

Social unrest spread across North African countries and the Middle East and evolved into riots and the collapse of at least one government so far. Skyrocketing food prices was certainly part of the problem, but it also served as a breaking point for long-simmering issues between the people and their governments.

While riots had been reported for the last two weeks in Tunisia, Algeria and Indonesia to name a few, it was the sudden and widespread riots in Egypt that finally caught the financial markets’ attention. The Dow had its biggest drop since mid-November, as investors moved to the safety of the US dollar and precious metals – just in case things would get worse.

The commodities complex of course got caught up in the volatility, with wheat leading the way lower in the grain complex. A higher dollar doesn’t help wheat’s export prospects, although this marketing year will be somewhat immune to the higher dollar since we’ve become one of the few remaining sources of wheat supplies. Indeed, when it comes to milling quality stocks, this week it became clear that we’re probably the only source of supplies as Canada couldn’t even fill a tender of high-pro spring wheat to their most important customer, Japan.

Foreign governments are being much more pro-active in 2011 than they were in 2007 with securing grain stocks. Just in the last two weeks, Tunisia and Algeria have bought 3 MMT of wheat, and have requested accelerated deliveries. Import tariffs are falling with Indonesia and Russia both eliminating their tariffs on a number of grains and food stuffs for the next few months. China continued their talk that they would increase their imports of meat, sugar and other necessities.

The US had another stellar week of export sales, topping the 1 MMT for the second week running. We’re seeing a spate of non-traditional buyers step into our markets as well, like Jordan and Syria who normally buy from their neighbors or the EU. It’s a much longer transport route to take wheat from the US, but just once again speaks to the dwindling supplies of quality stocks around the world.