Skip to comments.Food Crisis Doomsday Scenario As Prices To Shoot Through The Roof
Posted on 08/31/2010 11:49:11 AM PDT by blam
Food Crisis Doomsday Scenario As Prices To Shoot Through The Roof
Politics / Food Crisis
Aug 31, 2010 - 08:52 AM
The worst weather on record coupled with the practice of speculation in the commodities markets are set to send food prices skyrocketing, bringing misery and starvation to large swathes of the worlds population. Are we set to see food riots this winter?
In the USA, Walmart has already announced a price hike of 5.8% on average for a 31-item basic basket for this Autumn. The long-term rise, however, is far more frightening, with the UNO predicting an increase of 60 per cent by 2030.
What is happening?
When there is a massive price spike, such as the case in recent years, followed by more price rises (as is the case today) the markets panic and speculative buying sends the prices through the roof. The market economy system is indeed not all about supply and demand but is also, and fundamentally, fuelled by speculative trading, with spot buyers buying future positions of commodities. When they are scarce, and the more so when the market senses that a scarcity exists, the price goes up.
This is what is happening today. September corn is up by 3.6% a bushel, wheat by 34 cents. In July the price of wheat shot up by the highest quantity in the last 50 years: 42 per cent. This in turn will push up prices of pasta, bread and cereals in the near future.
Prices set to rise for 12 to 18 months
Analysts predict upward trends in wheat, corn, soybeans, bean oil and bean meal and the general feeling is a continued rising trend over the next 12 to 18 months. As usual, no mechanisms have been activated to protect the worlds poorer populations from the dramatic effects of supply issues and the resulting speculation in prices.
Global production downturn
Russia reports a drop in production of around 20 per cent due to dry weather conditions. Drought has also affected Ukraine (where maximum production is set to reach just 66% of domestic demand) and Kazakhstan, while floods have affected 13 million acres of cereals in Canada and have wiped out a large part of Chinas harvest. Germanys wheat production is ten to twenty per cent down on 2009; in Argentina dry conditions mean that only 80% of the arable land for cereals has been planted.
The S word: Speculation
In todays market economy system, what drives the prices is not only supply and demand but also the S word: Speculation, where a handful of players push prices sky high and way beyond the reaches of the pockets of the average consumer. If the system were based upon supply and demand then the price of soybean would be bearish (top-down attack, falling), because the main producers (Brazil, Argentina and the USA), have had a good harvest. Then why is the price of soybean bullish (bottom-up attack, rising)?
Because cash premiums are forcing the soybean futures rates higher as a process of over-consumption of soybean is noticed in the marketplace (soybean is present these days in most foodstuffs and other consumable items). So much so, that the price of soybean would have to rise a further 50 to 80% to curb the current demand.
And it makes sense for this to happen and that is going to affect the price of everything we eat.
Couple this with the rising cost of transportation (crude and natural gas prices are set to rise from September) and we see our comfortable little monetarist-oriented market economy system has engendered another fine crisis looming on the horizon. Watch this space.
Vast swathes of the planet are set to go hungry. Those who were previously hungry may starve. It is the Doomsday Scenario and it is upon us. And it is caused not by the lack of supply or scarcity of abundance. It is caused by this manic, inhumane system, the S-word, Speculation.
With all the obesity in the USA, a food crisis might be the best thing for people’s health here.
“Vast swathes of the planet are set to go hungry. Those who were previously hungry may starve”
...with our resources we don’t need to play any role in this. We will, but don’t need to.
Naw the S word is Socialism and Speculators know what that causes
My crisis sensors were saturated long ago.
Accurate I’m sure.
OMG! ONOZ! We’re dooomed. Doomed I tell you. I’m spending all my money on canned spam.
The Jewell store we shop at lifted alot of their prices by a sizable amount this past month.
Food prices, including fast food, seem really high.
I must be a cynic as I was waiting until the end to see a “buy gold now!” incantation.
I’m bearish on the doomsday scenario.
Or if you believe in divine providence you could say that people were prepared for the inevitable obama famine.
Maybe your dollars are just really weak.
Has Walmart ever preannounced price increases, especially a long time in advance? That sets off my BS detector for the who article.
Normally you just go into a store and see price were higher than the last time you went in. Sometimes they try to sneak in a big price increase like when a bag of chips goes from $3 to $4. They'll put up the new $4 sign, but say $1.11 off/now only $2.89.
My dollars are the size of a postage stamp, like in that gold commercial, lol.
Send in the tanks. Crush the speculators and profiteers!
Just dropped 350.00 at Sam’s Club.
Lots of coffee and peanut butter.
Between the rice I bought before, the stuff I bought today and the produce I’ve been processing we’ll make it through pretty well.
chances are good that the politically connected with legislative control of present grain resources will profit tidily in this current round. our next generation of leaders.
most in the west will pay whatever the cost for their beers, and the darkskinned brethren they profess compassion for will eat dirt and die in grizzly fashion.