Skip to comments.FOOD SHORTAGE COMING AS FARMERS STRUGGLE
Posted on 01/18/2010 8:10:50 PM PST by Comrade Brother Abu Bubba
Legendary investor Jim Rogers remains bullish on commodities and says the world will soon face food shortages.
"The fundamentals (for agriculture) have gotten better," he says.
"The inventories are now at the lowest they've been in decades, not in years.
And that trend is just intensifying, Rogers tells CNBC.
Things are getting worse. Many farmers cant get loans to buy fertilizer now, even though we have big shortages developing "
And what will be the end result of this dynamic?
"Sometime in the next few years we're going to have very serious shortages of food everywhere in the world, and prices are going to go through the roof," Rogers said.
Agriculture is his favorite sector in the commodity space, but Rogers likes other commodities as well.
Take oil, for example.
Over the next decade or so, oil is going to go much higher, because known reserves of oil are declining at a very rapid rate, Rogers said.
He also favors gold for the long term, saying that if it drops $200 an ounce, hell buy more.
But if youre looking for precious metals to acquire now, Rogers recommends silver or palladium, because they havent soared as high as gold.
Many experts share Rogers bullishness on commodities.
Goldman Sachs, for example, sees the S&P GSCI Enhanced Total Return Index appreciating 17.5 percent this year.
Demand is growing on a global basis, Peter Sorrentino, a money manager at Huntington Asset Advisors, told Bloomberg.
Translation: Oil prices increased during the year while paradoxically the rig utilization rate decreased 14 percent. Divergence.
Fewer rigs working means less oil discovered and developed. Expect oil prices of about $100/Bbls. in 2011 increasing to $200-300/Bbls. in about 2012.
Food prices will increase from the current levels as well.
Must be time to panic then. Well, OK.
turn the water on in California’s central valley, already!
Farmers can’t get loans because the government is borrowing all that, in the form of selling bonds. The unpredictable, chaotic business climate fostered by government makes it a bad time to invest a lot of money. They’re just buying bonds.
Why do they call it canning and not jarring?
When people cant buy ornamentals for need of food the farmers will plant what pays.
He told of visiting a woman and noticing that she had 50-100 5 pound bags of sugar stacked in her kitchen. Given that sugar was a "Rationed Commodity" during WWII, he asked her what she was going to do with all the sugar?
She immediately replied that she had been forced to purchase all the sugar before.... "THE HOARDERS DID"!
I remember many other bizarre tales about the behavior of folks during the WWII rationing days! Such actions were observed during the gasoline rationing during the Carter years!!!
Government "Planning" always results in unintended consequences!!!
Not only that, but the soviets in the federal government are planning to take 59 million acres of US farmland out of production— no such thing as private property here— to use as a phony globalist ‘carbon offset’ and plant trees on it.
This is a plan by the feds that Ag periodicals have uncovered and is currently in the works.
“Food prices will increase from the current levels as well.”
If the U.S. government killed the “ethanol as fuel program” and freed corn up for consumption and export, food prices would fall and the U.S. would be feeding the world again.
She has Pelosi eyes.
It's less jarring to call it canning :-)
Besides, the noun "can" predates the noun "jar" by a few centuries, according to M-W.
Just another chapter in the Marxist playbook.
If you look at the chart from ODS/Weekly Rig Count for the Gulf of Mexico, the information is just as stated.
59.5 % now, 73.2% one year ago. Less rigs working as compared to last year = future price increases in oil.
Major new oil finds/production, plus rising rig counts in the Gulf of Mexico and Brazil, combined with China’s reduced demand, means lower oil prices.
Every year my garden gets bigger and bigger.
When I drive around the area I’ve seen more and more Veg gardens every year.
Last year I changed the name of my ‘victory garden’ to the;
........JOHN GALT MEMMORIAL GARDEN...
I guess the same reason they call it Ovaltine instead of Roundtine....yes ripped from Seinfeld...
I don't know, I've not gotten past asteroid myself.. :)
‘ Things are getting worse. Many farmers cant get loans to buy fertilizer now, even though we have big shortages developing “’
First, fertilizer has been at all time highs for at least a couple yrs now. Its priced at levels well beyond what one might realize in crop prices. Chems and seed are the same way. These prices aren’t sustainable w/o (large) commodity price increases.
That said I know many guys in my area that just aren’t applying anywhere near the amt of fertilizer as in the past. Its not a matter of getting the loan its a matter of not wanting to carry the debt in an economy that all screwed up.
The large petroleum producers (processors like Exxon-Mobil, Shell, BP etc.) have not replaced their oil reserves for over 5 years (a declining, sinking asset). Exxon-Mobil is purchasing a natural gas producer (XTO), effectively abdicating their oil roots. Exxon-Mobil is betting that natural gas prices (which are separate and distinct from oil prices) are headed higher (looks like a intelligent business decision). Oil prices are headed even higher in the next 2-3 year time frame as compared to natural gas.
The companies do not have access to explore and produce, not only in the US, but around the world as well as they did when the companies were the "Seven Sisters". The petroleum industry is a worldwide industry. Yes, no doubt about it, the US Government has played a detrimental role in restricting offshore US exploration and production of oil.
Higher exploration costs are also involved. The "easy" oil is all gone i.e. the cost to replace that consumed Bbl of oil has definitely increased. I used to take at most 30 min. helicopter ride out to the rigs 20 years ago, now it's a 1 3/4 hr. ordeal out to the deeper more $expensive to produce from waters. The cost to transport one passenger is about $700/flight one way.
Brazil (Petrobas) is about the only company that has increased it's reserve base. There is no guarantee that the Brazilians will export that newly discovered oil so that you can stay in your cocoon of ignorance driving around in your Corvette in Alabama. The Brazilians have their own domestic consumption concerns. Don't count on that oil being exported to the US, the Chinese will be interested in it.
By the way, Investor Jimmy Rogers is from Alabama although he moved.
Oil is at $78 per barrel today. You claim that production is down, so oil will go up.
I’m pointing out that consumption is down, so oil will decrease in price.
Pick a timeframe. 1 month. 1 year. 1 decade. See who’s right.
In 2012 -2013, Oil will be selling for $200-300/Bbls.
Even T. Boone Pickens has stated that a free market does not exist in Crude Oil. That's your problem, you assume that a free market exists in crude oil. Replacement costs exceed consumption costs now.
It’s looking grim for your oil inflation prediction: http://www.calgaryherald.com/business/energy-resources/refinery+rate+drop+shows+crisis+downstream/2469373/story.html
Oil falling below $75: http://www.freerepublic.com/focus/f-news/2437368/posts
Why don’t you try looking at the charts that you post with the rig utilization rate of 77% last year vs. 55.9% now???
JUST AS I STATED!!!!
This year is 2010. I am not concerned about how low oil goes in the short term. It’s the next move UP, UNDERSTAND?
In 2012 - 2013, Oil will be selling for $200-300/Bbls.
My goodness! Is oil already deflated down below $73 this week?! $5 drop in how many days?? This is going to be a fun 5+ years of posts to you!
Man, is oil really down to $71 already?! Fascinating...
Down to $74.50 today...
We are headed to the largest corn crop in the entire history of the world.
AND a mountain of surplus corn.
We don't have a shortage of corn, we hve TOO MUCH.
...and can you imagine how miserable anyone would be if his diet consisted of yellow dent field corn?
Yeah, that would be miserable, which is why burning to to heat our homes and fuel our cars is on the table.
Ooops, oil production is increasing: http://www.freerepublic.com/focus/f-news/2627052/posts
Oil below $88, and now it's 2011. Tick. Tick. Tick goes the clock...
More than halfway through 2011 and oil isn't even at $100...
Less than 4 months until 2012 and oil is now down to $84...
The mind boggles at how long we'll have to go before you admit that you had no clue making your ridiculous $300/barrel prediction. ...but I'm up for years and years of mocking you in the meantime.
Just October, November, and December left until 2012...and oil is still in double-digits at $84/barrel.
Already October and oil is...down to $79/barrel. 2012 is almost here and the inflationists can't explain why prices are falling and falling and falling on the stock markets in the job markets in the housing market and on commodity exchanges.
Down, down, down goes the speed of money...
U.S. net petroleum imports have fallen to about 47% of the nation’s consumption, down from a record 60.3% in 2005, Energy Information Administration statistics show. It’s been 15 years since the nation’s reliance on foreign oil has been this low.
Several factors figure into the import decline, but a big one is a little surprising: U.S. petroleum exploration is experiencing a quiet renaissance with the help of technology and new drilling techniques.
The number of oil rigs in production in the U.S. has reached a 24-year high, according to oil field services company Baker Hughes. In 2005, domestic production was 1.89 billion barrels. This year, experts say, production is expected to surpass 2 billion barrels.
Over the last decade, geoscientists and engineers have come as close as technologically possible to creating a transparent image of the underground, bringing new life to old wells and finding billion-barrel formations, called “elephants.”
“What’s happening across the U.S. demonstrates how technology again and again opens new doors, and also old doors, that people thought were closed forever,” said Daniel Yergin, author of “The Quest: Energy, Security, and the Remaking of the Modern World,” the newly released sequel to his Pulitzer Prize-winning book “The Prize.”
Bruce Bullock, executive director of the Maguire Energy Institute at Southern Methodist University, was more specific: “Three-dimensional seismic technology has become much more sophisticated. New drilling methods allow them to penetrate formations that were once thought to be impenetrable. So we’ve seen a lot of investment dollars going back into areas that had appeared very unpromising.”
Orcutt is one example.
In 1901, wildcatters found “brown shale,” a sign that oil was present in exploitable quantities. But they bypassed that shallow layer and went straight down; various operators eventually drilled nearly 2,000 vertical wells that averaged about 3,000 feet in depth. Breitburn acquired the field in 2004 and determined that the shallow layer of diatomite a very porous, lightweight rock contained more oil than any other part of the formation.
“They didn’t have the science. They didn’t have a clue,” said Breitburn’s William S. Fong, senior staff reservoir engineer. “We have doubled the oil production in this field, and it is all coming from the shallow layer, no more than 900 feet deep.”
Monthly oil production at Orcutt has climbed to nearly 90,000 barrels from 50,000 barrels.
In Santa Fe Springs, another Breitburn oil field is delivering about 2,000 barrels a day rather than the 700 barrels a day it would have using old vertical well techniques. The gains have come from offset angle drilling, where the wells are dug at angles between 45 degrees and 80 degrees, into areas between old vertical wells where crude still remains, said Chuck Hawkins, Breitburn’s project manager.
Breitburn isn’t the only California oil company looking to reverse California’s long decline in oil production. Over the last five years, privately held Signal Hill Petroleum has buried 6,000 small yellow canisters around Long Beach and Signal Hill that contain sophisticated equipment so sensitive it can record the vibrations of a person walking past.
The devices work in tandem with the company’s fleet of “vibroseis” trucks, 68,000-pound vehicles that use hydraulics to bounce. The bouncing trucks produce vibrations that create images of formations as far as 3 miles underground, said Dave Slater, chief operating officer for Signal Hill Petroleum.
Slater says his small, 110-employee company and a subsidiary, the 70-employee Nodal Seismic, have sunk “tens of millions of dollars” into the effort.
“When we import oil, we really get no jobs out of it, no taxes from that oil. It’s just a huge suction on the economy,” Slater said. “And down below us, we believe there is a lot of oil that hasn’t been tapped.”
The leading edge of the production boom has come in parts of Texas, such as the Eagle Ford shale formation and the Permian Basin, as well as the Bakken formation, a huge reservoir under parts of North Dakota, South Dakota, Montana and Saskatchewan, said Fadel Gheit, senior energy analyst for Oppenheimer and Co. Gheit added that much of the work is from smaller oil companies that few people are familiar with.
There’s so much oil coming out of the Bakken formation that it has outstripped the existing pipeline capacity to move it to refineries for processing. Railroads such as BNSF and Canadian National have been pressed into service to move some of the crude.
New production isn’t the only reason for the drop in foreign oil dependency. Ethanol now accounts for a larger share of every gallon of gasoline, reducing the amount of refined oil needed. In addition, U.S. demand for gasoline and other refined products has declined, in part from the global recession and subsequent weak economic recovery. Refineries also have gotten more efficient and waste less oil in processing fuels.
But the most important change has been “the ability to make the ground below seem transparent,” said Jonathan G. Kuespert, Breitburn’s senior geoscience advisor. “We were never able to do that before.”
"The number of oil rigs in production in the U.S. has reached a 24-year high, according to oil field services company Baker Hughes."
LOL! Would you settle for $98/barrel midway through 2012?!
...or $92.50?! Hey, which way is oil supposed to be hyper-inflating again?!
When the process of preserving food by heating in a sealed container was invented, "can" referred to any small container, and the original small containers were glass and glazed ceramic vessels of the sort we would now call "jars" or "jugs". The welded and hermetically sealed containers we now call "cans" were invented long after the process of food preservation by "canning" was invented.