It's strange to hear the deflation advocates continue their mantra of lower prices while food prices have hit their highest levels in the United States in 26 years in March, and wheat continues to soar in price.
September futures for wheat hit $7.11 on Wednesday, a huge jump of 58 percent from June.
For now wheat is a problem, but it's doubtful that will continue, as countries around the world have increased wheat plantings for several years, and it's more the drought news coverage of Russia and Eastern Europe which is driving wheat prices, more than the actual supply available.
Even so, food inflation is a major threat, and that, probably more than any other element, can lead to social unrest and riots.
Businesses have said the rising inputs associated with their products will be passed on to consumers. And if foolish governments attempt the price control thing, it'll get worse, as enormous shortages will occur, making it even more volatile.
Major foods like meat, dairy and grain is expected to rise higher in price over the next decade, according to the Organization for Economic Cooperation and Development.
Another unknown is how the supply and demand factor will change as consumers in emerging markets increase their meat consumption, which increases demand not only for meat products, but grains used to feed the livestock.
Of larger emerging market countries, India is facing some of the larger inflation problems, with an annualized rate of 10.55 percent as of June.
People can play all the games with numbers they want, and change the definition or parameters of deflation, but inflation will be the problem going forward, and people need to make decisions based on that.
Showing posts with label Food Prices. Show all posts
Showing posts with label Food Prices. Show all posts
Wednesday, August 4, 2010
Wednesday, March 24, 2010
Goldman Sachs (NYSE:GS): Global Food Reserves Falling
Goldman Sachs: Food reserves as percentage of consumption
Food commodities have been a difficult sector to figure out, as there are a lot of conflicting element involved in the overall equation, and it'll take time to sort it all out. Goldman Sachs (NYSE:GS) says global food commodities, while having record ending stocks this year for some of them, when taken together as a percent of consumption, drops by 17 percent.
While most of us understand the population growth which will generate more food demand, there is also the supply side, which in many cases has created the record ending stock because of so many countries growing major crops for their own people and exports. That has put and kept downward pressure on food prices for a while now.
We'll know if and when food demand outpaces supply, as the prices of food will respond almost immediately.
When taking into account the 30-year average for reserves as a percentage of consumption, which is 27.7 percent, you can see there could be the possibility of a surge in food prices.
There's no way to no the bottom of course, but we're down in the major food commodities and there isn't a lot of room more to go.
Food commodities have been a difficult sector to figure out, as there are a lot of conflicting element involved in the overall equation, and it'll take time to sort it all out. Goldman Sachs (NYSE:GS) says global food commodities, while having record ending stocks this year for some of them, when taken together as a percent of consumption, drops by 17 percent.
While most of us understand the population growth which will generate more food demand, there is also the supply side, which in many cases has created the record ending stock because of so many countries growing major crops for their own people and exports. That has put and kept downward pressure on food prices for a while now.
We'll know if and when food demand outpaces supply, as the prices of food will respond almost immediately.
When taking into account the 30-year average for reserves as a percentage of consumption, which is 27.7 percent, you can see there could be the possibility of a surge in food prices.
There's no way to no the bottom of course, but we're down in the major food commodities and there isn't a lot of room more to go.
Marc Faber: Food at 200 Year Low
Marc Faber on Food Commodity Prices
Recently Marc Faber was talking food commodities and stated as a whole they are at their lowest levels when measured by real time dollars.
Faber said: “Food commodities are at 200 year lows in real time dollars.”
The question for the majority of food commodities is whether the supply of food will increase at a rate the demand is through a growing population.
Right now it seems there is a huge supply because, in fact there is. But that supply has come from a number of countries increasing their domestic acreage to grow a variety of commodities, especially major ones like wheat, corn and soybeans.
Once this come to fruition, the question then will be answered as to how the price of food commodities will react in the years ahead.
Even droughts and other events which bring down crop production hasn't dented the larger agricultural commodities because of the enormous amount being planted.
Eventually all of this will come to a head, but for now it seems a lot of the major food commodities will have downward pressure on prices.
One other major factor is the cost of inputs, which have seemed to rise in price some lately, but that can be offset by genetically modified plants which largely reduce the needs of those inputs, depending on which particular crop you're talking about.
The bottom won't hit with food commodities as a whole in my opinion, but they will be hit on a crop by crop basis, even more so the further you move from the major foods we eat.
Marc Faber on Food Commodity Prices
Recently Marc Faber was talking food commodities and stated as a whole they are at their lowest levels when measured by real time dollars.
Faber said: “Food commodities are at 200 year lows in real time dollars.”
The question for the majority of food commodities is whether the supply of food will increase at a rate the demand is through a growing population.
Right now it seems there is a huge supply because, in fact there is. But that supply has come from a number of countries increasing their domestic acreage to grow a variety of commodities, especially major ones like wheat, corn and soybeans.
Once this come to fruition, the question then will be answered as to how the price of food commodities will react in the years ahead.
Even droughts and other events which bring down crop production hasn't dented the larger agricultural commodities because of the enormous amount being planted.
Eventually all of this will come to a head, but for now it seems a lot of the major food commodities will have downward pressure on prices.
One other major factor is the cost of inputs, which have seemed to rise in price some lately, but that can be offset by genetically modified plants which largely reduce the needs of those inputs, depending on which particular crop you're talking about.
The bottom won't hit with food commodities as a whole in my opinion, but they will be hit on a crop by crop basis, even more so the further you move from the major foods we eat.
Marc Faber on Food Commodity Prices
Monday, February 8, 2010
Grain Prices Rise on Short Covering
Grain Prices Going Up
With the crop report about to come out, grain prices rallied some as investors raced to cover their positions in case something unexpectedly changes which would tear into their short positions.
Wheat, corn and soybeans were all up as the shorts were covered, as the crop report from the Department of Agriculture is due.
With grain prices having downward pressure for a month on large inventories, they are due for an upward move, and grain traders want to protect themselves from that.
The concern is if for some reason the supply of grain has declined in any way; an unlikely scenario, but you never know in the markets.
If nothing has happened to change the grain levels, we should see a lot of short positions entered into again.
Wheat for March delivery rose 10.75 cents, a 2.3 percent gain, to settle at $4.84 a bushel. Soybeans increased 16 cents to $9.295 a bushel, and corn increased 4.5 cents to $3.56 a bushel.
Grain Prices Going Up
With the crop report about to come out, grain prices rallied some as investors raced to cover their positions in case something unexpectedly changes which would tear into their short positions.
Wheat, corn and soybeans were all up as the shorts were covered, as the crop report from the Department of Agriculture is due.
With grain prices having downward pressure for a month on large inventories, they are due for an upward move, and grain traders want to protect themselves from that.
The concern is if for some reason the supply of grain has declined in any way; an unlikely scenario, but you never know in the markets.
If nothing has happened to change the grain levels, we should see a lot of short positions entered into again.
Wheat for March delivery rose 10.75 cents, a 2.3 percent gain, to settle at $4.84 a bushel. Soybeans increased 16 cents to $9.295 a bushel, and corn increased 4.5 cents to $3.56 a bushel.
Grain Prices Going Up
Friday, January 22, 2010
Commodity Prices Rise Hong Kong
Commodity Prices Rise in Hong Kong
Confirming what a number of investors and economists already know, the consumer price index in Hong Kong rose in December, primarily driven by rising food prices and other commodity prices.
The composite consumer price index in December increased 1.3% year over year. That followed on the footsteps of price increases of 0.5% in November, giving rise to fears inflation could continue growing for some time, something many have been concerned about after central banks around the world continued to run their money printing presses.
Attempting to downplay the price increases in commodities and food, the Chinese government stated this: "As the economic recovery, both locally and globally, is still at the early stage, the prevailing excess capacity on the supply side should help to contain the upward pressures on costs and prices."
Some Chinese economists disagreed with the official party line, saying increases in energy and food prices, and possibly other commodities could push consumer prices even higher than they're growing now.
Estimates are prices could increase by 3.7 percent in 2010 based on what was already said plus rental increases.
Commodity Prices Rise in Hong Kong
Confirming what a number of investors and economists already know, the consumer price index in Hong Kong rose in December, primarily driven by rising food prices and other commodity prices.
The composite consumer price index in December increased 1.3% year over year. That followed on the footsteps of price increases of 0.5% in November, giving rise to fears inflation could continue growing for some time, something many have been concerned about after central banks around the world continued to run their money printing presses.
Attempting to downplay the price increases in commodities and food, the Chinese government stated this: "As the economic recovery, both locally and globally, is still at the early stage, the prevailing excess capacity on the supply side should help to contain the upward pressures on costs and prices."
Some Chinese economists disagreed with the official party line, saying increases in energy and food prices, and possibly other commodities could push consumer prices even higher than they're growing now.
Estimates are prices could increase by 3.7 percent in 2010 based on what was already said plus rental increases.
Commodity Prices Rise in Hong Kong
Sunday, November 9, 2008
Chairman of the Indian "Forwards Markets Commission" Says Commodity Trading Suspension Should End
According to Chairman of the Forwards Markets Commission (FMC) in India, B.C. Khatua, he expects the current suspension of trading of commodity futures on potatoes, rubber, chana and soyoil to end on November 30.
“We will be making a submission of our analysis on the suspension to the government in the coming weeks. Our preliminary study indicates that easing inflation especially in food commodities makes the situation favourable to restart futures in these commodities,” said Khatua.
The reason behind the suspension was the misguided idea that futures markets were being manipulated by traders, even though there isn't a shred of evidence it's true.
If India wants to emerge as a predictable, reliable commodities market, they can't suspend trading on existing commodities just because the price of food increases.
In a number of cases traders have been fined because of gains they made in their trading on Indian commodity exchanges.
“We will be making a submission of our analysis on the suspension to the government in the coming weeks. Our preliminary study indicates that easing inflation especially in food commodities makes the situation favourable to restart futures in these commodities,” said Khatua.
The reason behind the suspension was the misguided idea that futures markets were being manipulated by traders, even though there isn't a shred of evidence it's true.
If India wants to emerge as a predictable, reliable commodities market, they can't suspend trading on existing commodities just because the price of food increases.
In a number of cases traders have been fined because of gains they made in their trading on Indian commodity exchanges.
Wednesday, August 20, 2008
Misguided U.S. Ethanol Subsidy Continues to Cause Food Prices to Soar
The corn-based ethanol subsidy in the U.S. continues to cause pain to consumers around the world as food prices will continue to rise for the foreseeable future, as chicken, beef and pork prices are projected to increase significantly.
U.S. lawmakers keep acting like nothing has gone wrong with the usual unintended consequences accompanying such ignorant initiatives.
U.S. lawmakers keep acting like nothing has gone wrong with the usual unintended consequences accompanying such ignorant initiatives.
Monday, August 11, 2008
Commodity News Around the Network
Arian Silver's Exploration Update-San Jose: Phase-1 Drill Results Summary; Phase-2 Drilling Progresses
High Desert Gold Plans to Drill the Bluebird Copper-Silver Property
Happy Corn Subsidy Pacific Ethanol: Company Gets Clobbered with High Corn Prices
Oil Drops Below $115 a Barrel
More Reasons to Drop the Ethanol Nonsense
Gold Plunges Below $820 an Ounce
ECB Launching U.S. dollar Liquidity-providing Operation
Wheat Growers Facing Tough Cost-Control Challenges in 2009
High Desert Gold Plans to Drill the Bluebird Copper-Silver Property
Happy Corn Subsidy Pacific Ethanol: Company Gets Clobbered with High Corn Prices
Oil Drops Below $115 a Barrel
More Reasons to Drop the Ethanol Nonsense
Gold Plunges Below $820 an Ounce
ECB Launching U.S. dollar Liquidity-providing Operation
Wheat Growers Facing Tough Cost-Control Challenges in 2009
Wednesday, June 18, 2008
A Look at the three Bills that could Impact Commodities Markets
Independent Senator Joe Lieberman revealed the drafts of three Bills which could cut back on the investment choices of large players in the commodities markets.
In the first bill, it would not allow pension funds of private or public companies holding over $500 million in assets to invest in energy or agricultural commodities on U.S. futures, foreign or over-the-counter exchanges.
The second Bill would empower the Commodities Futures Trading Commission to limit the share financial investors could hold in the commodity market.
Finally, in what is being called speculatation in the market, the futures regulator could put limits on investments deemed not connected to hedging activities. That would cut back on investments from huge investment banks on commodities swaps.
What I don't like about this is it is really an excuse by politicians for their revealed inability to handle markets. It underscores the weakness and limitations of government, something politicians don't like the electorate to think about.
It's also an attempt to deflect, rather than accept blame for the poor decisions by government officials that have led to high energy and food prices; things like not drilling for oil on American land and coasts, and the terrible decision to subsidize corn-base ethanol, which has resulted in higher food prices across the world.
In the first bill, it would not allow pension funds of private or public companies holding over $500 million in assets to invest in energy or agricultural commodities on U.S. futures, foreign or over-the-counter exchanges.
The second Bill would empower the Commodities Futures Trading Commission to limit the share financial investors could hold in the commodity market.
Finally, in what is being called speculatation in the market, the futures regulator could put limits on investments deemed not connected to hedging activities. That would cut back on investments from huge investment banks on commodities swaps.
What I don't like about this is it is really an excuse by politicians for their revealed inability to handle markets. It underscores the weakness and limitations of government, something politicians don't like the electorate to think about.
It's also an attempt to deflect, rather than accept blame for the poor decisions by government officials that have led to high energy and food prices; things like not drilling for oil on American land and coasts, and the terrible decision to subsidize corn-base ethanol, which has resulted in higher food prices across the world.
Friday, June 13, 2008
Corn Prices Explode to Record Highs
While food prices dropped last month, the continuing surge of corn prices may spur spur food prices higher, as the ethanol fiasco continues to haunt lawmakers and consumers.
The reason given for the price increase is the weather in the midwest, but that's in reality a secondary cause, as the subsidy's afforded the industry by lawmakers is the underlying reason prices continue to increase.
With so much corn going to dubious ethanol production, it has caused an artificial demand which has caused prices to grow. As a result, every time something happens in the supply chain, it is exasperated because of the ethanol foolishness.
Corn reached a record price of $7.30 a barrel on the CBOT Friday, the sixth day in a row it broke a record.
Producers of meat are especially concerned as animal feed costs will rise, causing them to raise their prices as well.
Thursday, April 17, 2008
Poll Says Commodity Price Surge Largest Economic Threat
Those responding to a Financial Times/Harris poll said the greatest economic threat to American and European economies is the rising price of commodites.
Out of people responding from six countries, only those from Italy didn't name commodity prices as the biggest economic threat. Other countries included in the poll were the United States, France, Spain, Germany and Britain.
A large number of participants in the survey also concluded they didn't have confidence their governments would be able to handle the economic challenges.
In America, 50 percent said they were "not confident at all."
This is of course the right thing to think, as government interference always brings unintended consequences that linger for years, many times creating new problems or exasperating the old.
Out of people responding from six countries, only those from Italy didn't name commodity prices as the biggest economic threat. Other countries included in the poll were the United States, France, Spain, Germany and Britain.
A large number of participants in the survey also concluded they didn't have confidence their governments would be able to handle the economic challenges.
In America, 50 percent said they were "not confident at all."
This is of course the right thing to think, as government interference always brings unintended consequences that linger for years, many times creating new problems or exasperating the old.
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