The Globalization of Agriculture had led to rise in Food Prices and Hunger amongst the most vulnerable populations in the world.Recent Floods and Droughts in major Grain Producing Countries has led to another major spike in major cereal prices.The fickle weather and prospects of another round of Trillion Dollar Quantitative Easing by the Fed has further exacerbated the already precarious Food Position.Corn Futures jumped by almost 15% in 2 days due to news of Crop Shortfalls in the USA.Wheat Prices have already been on a major roll due to Export Restrictions by Russia.Rice Prices have also started to increase in sympathy with the increase in Wheat and Corn.
USA Easy Money Policies is Litterally a Killer
The US Federal Reserve is hell bent on preventing deflation through whatever means possible.It has raised the prospect of 2008 when Commodities all over the world raced to new highs due to cuts in Interest Rates.2010 has already seen its first food riots in Africa and 2011 should more of the same.Every Commodity be it Gold,Silver,Coffee,Sugar,Rice,Wheat is jumping higher as the common denominator Dollar gets Debased by US Policies.While the stupidness of the Monetary Easing is a big exhaustive issue in itself,the prospect of higher commodity prices is a huge danger.It is already fueling dangerous equity bubbles in the emerging markets of Asia.Currency Wars are already starting to happen on a small scale as Crazy Monetary Policies take hold in the US.Food Prices are a very major problem in poor countries unlike developed countries where food forms only a small part of the daily expenditure.With Food forming 50-80% of the expenditure of poor citizens,a 50% increase in Prices immediately leads to hunger and starvation.However don’t think the US Fed concerns itself with such trivial issues.
Corn rose 5 percent in Chicago futures trading after soaring 9 percent on Friday.Soybeans, sugar and coffee also had sharp gains in the two sessions on worries that agricultural supplies would tighten from smaller harvests forecast for this year. Ethanol futures in New York surged 9.9 percent to close at $2.185 a gallon. Corn is the main feedstock for ethanol production.
The dollar rose slightly, but that did not derail gains in commodities.The dollar’s fall has encouraged the commodities rally during the last month, as investors speculated that the Federal Reserve would soon undertake new stimulus measures to support the economy.
The rice harvest in the U.S., the world’s fourth-largest exporter last year, may be at least 10 percent smaller than estimated, missing a forecast record output and pushing prices 30 percent higher, a producer’s group said.Rough-rice futures in Chicago may surge to $16 to $17 per 100 pounds by January after hot weather in producing areas of the U.S. curbed yields and lowered milling rates, said Dwight A. Roberts, president of the U.S. Rice Producers Association, who correctly predicted the grain would peak at $16 last year.Rice has rallied 37 percent from this year’s low of $9.55 per 100 pounds on June 30.
Farmers may switch from rice to planting wheat and soybeans if prices fall below that break-even level, Roberts said.Wheat futures have surged 67 percent from this year’s low on June 9, while soybeans have rallied 31 percent from this year’s low on the same date.