[Hinterlander]

Grain, Soybeans Rise as Food Riots Spur Demand for U.S. Exports

http://www.bloomberg.com/news/2011-01-26/wheat-corn-soybeans-jump-as-food-riots-bolster-demand-for-u-s-exports.html


$this->bbcode_second_pass_quote('', 'W')heat rose, capping the longest rally since November 2009, while corn and soybeans climbed as countries increase purchases from the U.S., the world’s biggest exporter, to cut food inflation and quell civil unrest.

Food-exporting countries are “strongly advised” not to restrict shipments to prevent “more uncertainty and disruption” in world markets, the United Nations said. Governments in Egypt, Algeria, Morocco and Yemen have faced protests amid rising costs and high unemployment, and a revolt toppled Tunisia’s leader.

“Sovereign nations are beginning to stockpile food to prevent unrest, and that will help to boost demand for U.S. grains,” said Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana. “You artificially stimulate much higher demand when nations start to increase stockpiles.”

Wheat futures for March delivery rose 18.25 cents, or 2.2 percent, to close at $8.565 a bushel at 1:15 p.m. on the Chicago Board of Trade, capping a seven-day advance of 11 percent. Earlier, the price reached $8.6125, the highest for a most- active contract since Aug. 6. The grain has jumped 73 percent in the past 12 months.

Corn futures for March delivery climbed 13.75 cents, or 2.1 percent, to $6.5775 a bushel, the first gain in three sessions. The price has surged 82 percent in the past 12 months.

Soybean futures for March delivery advanced 11 cents, or 0.8 percent, to $13.855 a bushel. The oilseed has gained 46 percent in the past year.

Topple Governments
The commodities climbed in 2010 after drought slashed crops in Russia, Ukraine and other parts of Europe, and adverse weather reduced harvests in the U.S., Canada and Australia. Governments from Beijing to Belgrade are increasing imports, limiting exports or releasing supply from state stockpiles to curb food inflation.

A surge in food and energy costs is stoking inflation in emerging markets and causing riots that may topple governments, Nouriel Roubini, the New York University economist who predicted the financial crisis, said today in an interview in Davos, Switzerland, with Tom Keene on Bloomberg Television’s “The Pulse.”

“When you look at what’s happened in the former Soviet Union and Australia, wheat supplies are tight,” said Dan Kuechenmeister, the manager of the commodities department at RBC Dain Rauscher in Minneapolis, Minnesota. “You hear about the food riots in parts of the Middle East. There’s just all sorts of things out there that have people a little bit on edge.”

Algeria agreed to buy 800,000 metric tons of wheat today and ordered the state-run grain agency to speed up imports, Reuters reported.

China Outlook
Demand may increase in China, the leading soybean importer and the second-biggest corn consumer, said Dan Cekander, the director of grain research for Newedge USA LLC in Chicago.

Today, U.S. exporters reported sales of 227,000 tons of soybeans to China, the U.S. Department of Agriculture said. Yesterday, the agency announced a record one-day sale of 2.74 million tons to the Asian nation.

China may be “virtually out” of corn and might boost imports after demand from livestock producers sent the domestic price of the grain surging close to $8.50, Sterling Liddell, a vice president at Rabo Agrifinance, said today at a conference in Chicago.

In the 12 months that ended Sept. 30, China was a net importer of corn for the first time in 14 years, USDA data show.

[eXpat]

Just to complement Hinterlander´s post, nations are really stocking up the pantry
Indonesia's Massive Rice Import Order Leaves Markets Stunned
$this->bbcode_second_pass_quote('', 'J')AKARTA — Indonesia’s bumper purchase of 820,000 tons of Thai rice, more than four times the volume initially sought, lifted the market on Wednesday, but traders were unconvinced prices would stay high with Vietnam’s rising supply and lower imports projected from the Philippines.

The volume of rice the National Logistics Agency (Bulog) bought from Thai exporters for prompt shipment far surpassed the 170,000 tons to 200,000 tons announced earlier for the batch, traders and industry officials said.

“The deal surprised the market as it was bigger than expected and it has automatically pushed domestic milled rice higher,” one exporter said.

Firmer prices of the staple food are of concern to policy makers anxious to avoid a repeat of the riots triggered by price spikes in 2008.

[Revi]

Scary stuff, but it looks like it may be good news for farmers at least.

These countries are buying food and distributing it to keep their people cool, but will they run out of money to buy it with?

[Pretorian]

The answer to this is yes, obviosly. International welfare agencies will also run out of money. Is pop-corn good with maple syrop on it? I might try it.

[Revi]

Popcorn is excellent with maple syrup. Anything is good with maple syrup. If the price of sugar keeps going up we'll be eating a lot of pancakes. Fortunately we'll have some syrup to put on them.

I think the food issue is the fuse that seems to light up these countries. The price of basic commodities doesn't affect the food we eat here much, but the price of rice and wheat are very important to people who live on a couple of dollars a day. They are faced with the choice of starve or riot.

Algeria and other countries have been buying wheat and distributing it to the bakeries to keep the price of bread down. I think it's a desperate move, but they can see the writing on the wall. They have to do it to keep people from toppling the government. How long can they hold on?

[Hinterlander]

Beijing faces longest wait for snow in 60 years

http://www.msnbc.msn.com/id/41323072/ns/weather/

$this->bbcode_second_pass_quote('', '
')BEIJING — China's capital is facing its longest wait for winter snowfall in 60 years as drought in the northern part of the country affects millions of people.

State media say if it doesn't snow in Beijing on Saturday this will be the longest the capital has had to wait in the six decades since the weather bureau started keeping such records. No snow is forecast in the coming days.

Months of dry weather have given China's key wheat-growing province of Shandong its worst drought in at least 40 years. That threatens to put further pressure on surging food prices.

Officials in Hebei province tell the state-run Xinhua News Agency that 9 million people there have been affected by drought.

[eXpat]

And yet another record
World food prices hit record high: UN agency
$this->bbcode_second_pass_quote('', 'W')orld food prices reached their highest level ever recorded in January and are set to keep rising for months, the UN food agency said on Thursday, warning that the hardest-hit countries could face turmoil.

Rising food prices have been cited among the driving forces behind recent popular revolts in north Africa, including the uprising in Egypt and the toppling of Tunisia's long-time president Zine El Abidine Ben Ali.

And in its latest survey, the Food and Agriculture Organisation said its index which monitors monthly price changes for a variety of staples averaged 231 points in January -- the highest level since records began in 1990.

"The new figures clearly show that the upward pressure on world food prices is not abating. These high prices are likely to persist in the months to come," FAO economist and grains expert Abdolreza Abbassian said in a statement.

The Index rose by 3.4 percent from December -- with big increases in particular for dairy, cereal and oil prices. The rises were most significant in China, India, Indonesia and Russia, data from FAO's monthly report showed.

"There are a lot of factors that could spark turmoil in countries and food is one of them," Abbassian said, pointing out however that several countries have become better at managing prices after a series of riots in 2007 and 2008.

"They have learnt from previous episodes," he said, adding however: "These are obviously not very easy times. There is now no hope that prices will return to anything we can consider normal, at least until the summer."

The data from the Rome-based FAO showed that prices for dairy products rose by 6.2 percent from December, oils and fats gained 5.6 percent, while cereals went up by 3.0 percent because of lower global supply of wheat and maize.

"The increase in prices follows stronger export demand during the last month and concerns about tightening supplies of high quality wheat. The market was also supported by higher oil prices and a weaker US dollar," FAO said.

Meat prices remained broadly stable due to a fall in prices in Europe caused by last month's scare over dioxin poisoning in eggs and pork in Germany, compensated by a slight increase in export prices from Brazil and the US.

"High food prices are of major concern especially for low-income food deficit countries that may face problems in financing food imports and for poor households which spend a large share of their income on food," Abbassian said.

Global aid agency Oxfam said: "Millions of people's lives are at risk."

"Poor people in developing countries spend between 50 and 80 percent of their income on food, making higher prices, as well as unpredictable prices, a serious threat to their ability to eat," Oxfam said in a statement.

[Revi]

Is this the beginning of the die off? Since Russia had a bad harvest due to heat and drought world wheat prices have taken off. That was caused by climate change. That is one domino that knocked down Tunisia and is causing the unrest in Egypt. We're seeing some real changes now.

[SeaGypsy]

Cyclone Yasi just wiped out $500 million worth of Australia's sugar crop and 75% of it's bananas; not that the bananas affect much outside the country, but sugar is a global commodity. The recent and current floods will push up all kinds of food prices in Australia, with the upside being probably a few good wheat seasons ahead and reasonable pasture across much of the continent.

[sparky]

.
A nice one , I know it's not fair

Asset purchases by the US Federal Reserve do not cause rising food prices in countries such as Egypt, the central bank’s chairman Ben Bernanke said on Thursday.

“I think it’s entirely unfair to attribute excess demand pressures in emerging markets to US monetary policy, because emerging markets have all the tools they need to address excess demand in those countries,” he said.

He mention the " emerging markets " suppressing " demand " , since demand is for food ,
I wonder if he guess how third world countries use the military to suppress "demand "

http://www.ft.com/cms/s/0/5c4aeaea-2fbd ... z1Cxwjcsmy

[Roy]

If the Bernank said it, it must be true.



ETA: Guess I'm not the only one thinking that... After posting the above I went over to Market-ticker and lo and behold.

http://market-ticker.org/akcs-www?post=179112

$this->bbcode_second_pass_quote('', 'S')o why did the price ramp not start until more than a year later, when QE2 was talked about?

Kudlow and other critics of the Fed are confused. They think that because many commodities are priced in U.S. dollars that means that any price movements can be traced back to U.S. policies. But the fact that oil and other commodities are priced in dollars is irrelevant in a world of floating exchange rates.

It is?

The Egyptian Pound (EGP) has been pegged to the dollar on an effective basis since 2005.

Their compound inflation rate over the last three years is 45%.

That is, the cost of living has risen 45%.

Their per-capita GDP is 1/17th of ours, and hasn't materially expanded during that time.

Our per-capita GDP is $47,000, which is quite close to median household income (right near $50k.)

Their per-capita GDP is $2,700 (both from the CIA World Factbook.)

Would you like to run the numbers on what a 45% increase in the CPI would do to someone living here with a $2,700 per-capita domestic output (which likely closely approximates household income there too)?

That person would starve.... and maybe riot, eh?

Just because it costs more dollars to buy a barrel of oil or a bushel of wheat doesn’t mean that it will also cost more euros, or Egyptian pounds, or Chinese yuan to buy that barrel or bushel. It’s the exchange rate that matters, not the level of the federal funds rate.

The Egyptian Pound is pegged to the dollar.

You can argue that it shouldn't be, but right now it is and has been on an effective basis since '05.

Bernanke 0, everyone else who has pointed out the facts (that you refuse to look at) 1.

Before blowing smoke out one's butt, one should check the facts, especially when they're right under your nose.

[SeaGypsy]

Which brings up another good reason for the USD to keep inflating; throwing off pegged currencies- forcing them to float.

[sparky]

.
This is getting quite serious , and the cyclone was just what was not needed
next year there could be some countries boiling
The forecast is for food inflation to get going or even accelerate

http://www.ft.com/cms/s/0/60af28b6-2f00 ... z1Czeoe68T

[eXpat]

The consensus for both optimists and pessimists seems to be that high prices are here to stay:
Rising Food Prices May Not Signal New Crisis
$this->bbcode_second_pass_quote('', 'W')ASHINGTON, Feb 4, 2011 (IPS) - As food prices rose for the seventh month in a row in January, contributing to recent popular unrest in the Middle East and a spike in commodities purchases by developing countries last week, some analysts are quick to make comparisons to the dry years of 2007-2008.

But others warn against panic and oversimplified predictions of an impending food crisis, which contribute to price volatility.

"It is important to underline – and we've been trying this rather unsuccessfully – a high food price index doesn't necessarily mean a food crisis," Abdolreza Abbassian, senior economist at the United Nation's Food and Agriculture Organisation (FAO), told IPS in a telephone interview.

After a crisis in 1974, world food prices fell steadily over the following decades and hit an all-time low in the early 2000s. But beginning in 2005, food prices soared, ushering in the crisis of 2007-2008.

In post-mortem studies and short-term forward-looking simulations, including those conducted by the United States Department of Agriculture and jointly by the Organisation for Economic Co-operation and Development and the FAO, researchers largely concluded that the steep prices would continue.

"It is reasonable to expect prices to remain high in the years to come (especially as economies recover from the financial crisis)," stated a 122-page report published last year by the International Food Policy Research Institute (IFPRI) titled 'Reflections on the Global Food Crisis'.

[eXpat]

India's economic growth under 'threat' from inflation
$this->bbcode_second_pass_quote('', 'I')ndia's prime minister has warned that the country's rapid economic growth is under "serious threat" from inflation.

Manmohan Singh said getting inflation under control was a matter of urgency, raising the prospect of an eighth interest rate rise in under 12 months.

Emerging markets like India, where GDP growth is running at 8.5%, are helping to drive global economic recovery.

But Mr Singh said India's inflation rate of 8.4% - and food price inflation of 17% - was unsustainable.

"Inflation poses a serious threat to the growth momentum. Whatever be the cause, the fact remains that inflation is something which needs to be tackled with great urgency," he said.

Analysts believe that surging food and oil prices mean that India's central bank may have to raise interest rates before its next policy meeting, which is scheduled for 17 March.

India's stock market has fallen this year on fears that high inflation will scare off foreign investors.

Wages in India are also rising as workers demand pay that keeps up with the cost of living.

[Tyler_JC]

It's important to remember that many countries in the developing world have massive government subsidies for staples like cooking oil, bread, gasoline, etc.

http://www.nytimes.com/2008/01/17/world/africa/17bread.html

$this->bbcode_second_pass_quote('', 'E')gypt started subsidizing staples like bread, sugar and tea around World War II, and has done so ever since. When it tried to stop subsidizing bread in 1977 there were riots. Egyptians are generally not known as explosive people, but tell them you are raising the price of bread — of life — and beware.

So the bread subsidy continues, costing Cairo about $2.74 billion a year. Over all, the government spends more on subsidies, including gasoline, than it spends on health and education.

[SeaGypsy]

$this->bbcode_second_pass_quote('Tyler_JC', '')$this->bbcode_second_pass_quote('', '[')u]So the bread subsidy continues, costing Cairo about $2.74 billion a year. Over all, the government spends more on subsidies, including gasoline, than it spends on health and education.

[eXpat]

Oil instead of food
Corn prices rise as global stockpiles shrink
$this->bbcode_second_pass_quote('', '-')- Corn prices rose Wednesday after a new government report predicted stockpiles will hit a 15-year low by late August.

The U.S. Agriculture Department's latest forecast said corn supplies are expected to total 675 million bushels as of late August when this year's harvest begins. That would be the lowest surplus level since 1996.

The government said supplies have dwindled over the past month because of improving demand, largely from ethanol producers.

Global corn supplies also are expected to be lower, in part because of weather issues that affected Argentina's crop and improving demand, the agency said.

The report measures global supply and demand for grains, oilseeds and other crops. The department said its projections for wheat and soybean reserves remained unchanged at historically low levels.
"It's an unbelievable development as far as (corn) supply reductions," said Jason Ward, analyst with Northstar Commodity. "More than ever, we need the 2011 crop to be huge."

[Satori]

serious crop losses in Mexico will put even more pressure on food prices

http://theextinctionprotocol.wordpress. ... 00-losses/

[Hinterlander]

China's Wheat Basket Faces Its Worst Drought In 200 Years


http://www.businessinsider.com/china-drought-20-years-2011-2

$this->bbcode_second_pass_quote('', 'C')hina's wheat basket, Shangdong Province, is stuck in the worst drought in 60 years. If weather forecasts hold true, this will be the worst drought in 200 years, according to Xinhua.

The government has already declared a state emergency to send relief to the province, including trucks full of drinking water and special equipment to irrigate the fields.

The Three Gorges Dam is at its lowest level in years as reserves are depleted, according to Xinhua.