Soybean and Rice Prices Rise in Empathy with Corn and Wheat to make new records

Food Prices are rising at an incredible pace around the world due to a combination of money printing by the USA and Bad Weather in Russia and Asia.The major cause of the Food Price Increase has been the global rush towards investing in commodities as currencies get devalued by countries eager to increase exports in a zero sum game.Wheat Prices were the first to rise after Russia stopped exports leading to the sharpest gain in the last 2 years.Corn prices have increased with increased demand from ethanol,bad harvests and relentless QE.Rice and Soybean prices were bound to rise in empathy with other grain prices.Note these two food varieties are substitutes of corn and wheat.So it makes sense for speculators and consumers to increase the demand for these 2 commodities as well.

Rice Price Increase after Flooding in Biggest Exporters

Rice Prices have shown a record increase after floods sharply reduced output in the 2 main exporter Vietnam and Thailand.With inventories being sharply cut and harvests going down it is not much of a surprise.Rice importing countries like Philippines will be badly hit as their per capita income is quite low and they have a large poor population highly sensitive to increasing food prices.Expect 2011 to be a Hunger Year for a large chunk of the world’s population thanks to Ben Bernake and print his way to prosperity team.

Rice Futures Set for Longest Winning Streak Since March 2008 – Bloomberg

Rice futures advanced for an eighth straight day, heading for the longest winning streak since March 2008, on concern that increased demand and crop losses in the biggest producers may curb global supply.Shipments from Thailand, Vietnam, Pakistan, the U.S. and India, which account for about 80 percent of global trade, will gain 8.4 percent from a year earlier to 24.7 million metric tons this year, draining stockpiles, according to Bloomberg calculations based on Oct. 8 estimates by the U.S. Department of Agriculture.

Hot weather was forecast to curb yields in the U.S. as rice crops in Thailand and Vietnam, the two largest exporters, and the Philippines, the biggest buyer, were hurt by excessive rains and flooding. Crop damage in those countries comes amid production losses in Pakistan, the third-largest exporter last year, where floods destroyed 2.39 million tons of rice, Farm Minister Nazar Muhammad Gondal said on Sept. 28.

Soybean reaches 16 month high as China steps up Demand

Soybeans which had not run up that sharply has now started to show an increasing trend with the Chinese starting to import huge quantities.China is the 800 lb gorilla in the commodities trade and it has a huge appetite which can heavily influence the prices.With domestic soybean prices much higher compared to international prices and food inflation starting to increase ,the Chinese have stepped up purchase from USA leading to a new 16 month high for Soybean prices.

Soybeans Advance to 16-Month High on Rising Demand From China – Bloomberg

Soybeans climbed to the highest price in more than 16 months on speculation China, the world’s largest importer, may boost overseas purchases to increase domestic supplies and cool inflation. Soybeans for January delivery increased as much as 0.9 percent to $12.35 a bushel, the highest price for the most- active contract on the Chicago Board of Trade since June 5, 2009.

May-delivery soybeans in Dalian rose as much as 2.3 percent to 4,341 yuan ($653) a metric ton, the highest price for the most-active contract since Sept. 1, 2008. U.S. soybeans for January delivery are 69 percent of the value of that contract, according to data compiled by Bloomberg.

Imports of soybeans may total 4.65 million tons this month, the China National Grain & Oils Information Center said in e- mailed report today. The volume will be almost the same as in September and higher than the 4.16 million tons estimated by the Ministry of Commerce, it said.

Summary

Food Prices are on a secular  growth trend given the increasing world population,wealth,global warming and almost static supply.It promises to be a decade on increasing hunger and desperation for the world’s poor which are concentrated in Asia and Africa.India is seeing a 15% food inflation and is at most risk from the adverse effects of global warming.A situation being blissfully ignored by policymakers mired in corruption.