Posted on 04/28/2008 3:24:31 PM PDT by kiriath_jearim
Vast amounts of money are flooding the world's commodities markets, driving up prices of staple foods like wheat and rice. Biofuels and droughts can't fully explain the recent food crisis -- hedge funds and small investors bear some responsibility for global hunger.
Not long ago, Dwight Anderson welcomed reporters with open arms. He liked to entertain them with stories from the world of big money. Anderson is a New York hedge fund manager, and as recently as last October he would talk with enthusiasm about his visits to Malaysian palm-oil plantations and Brazilian grain farms. "You could clearly see how supply was getting tight," he said.
(Excerpt) Read more at spiegel.de ...
Ping.
There are a lot of hedge funds that are going to go broke betting on crops two years in advance. With the wild weather the past couple of years, even farmers are not crazy enough to do that. You better hope your fund isn’t betting against the weather.
The main sponsors of the so-called news media started the propaganda scare that fired the food scare “speculators” up. Before that, they paid to have lots of propaganda spewed about a recession to come then put a lock against hiring the first of December.
They want to slow certain communist Asian economies down a little in order to bring oil down and the dollar back up. They are the “free traders.” But they won’t get what they want before getting enough courage to stop trying to hinder defense (Iran) and letting oil go temporarily high, until that’s done.
Oil will go much higher and the dollar much lower, after Iran has nuclear weapons. It’s time to find the will to fight that our previous generations had.
A smart feller with a bit of capital could make a buck or two.
Central bankers love to play this misdirection game - getting the media and the public to blame “speculators” for inflation that results from them printing too much money.
Have there been dramatic declines in rice production? Is rice used in the manufacture of biofuels?
Why do the leaders of Somalia refuse to give grains from the largess of the US? They have dumped untold tons of grain from piers into the ocean.
Didn’t Kenya steal all the farms from whites and give them to locals who couldn’t grow anything?
This is BS, pure and simple.
Globull food shortage = globull warming. Same story, different issue.
Welcome to one of the major components to high oil prices. Only with oil, there are VERY few companies that can actually take deliveries. So the rich keep on getting richer there.
At least with food futures, it’s open to more speculators.
Oh, just btw, Rough Rice was down the limit today, with the offer pool about 2700. In plain English, that means it's almost surely headed lower again tomorrow.
It's still a buy, of course. Asian nations have a longstanding cultural imperative to be self-sufficient in rice. Bar a miraculously huge crop this year, that ain't-a-gonna happen.
One of the leading rice experts in the world, Milo Hamilton (lead buyer for Uncle Ben for 12 years, helped write the Rough Rice contract on the Chicago Board of Trade, asks and gets $10,000/month for his industry newsletter) says flat out that $30/cwt is a lock cinch, and $50/cwt has a decent shot, esp if any Asian crop fails as did the Philippines' crop last year.
This is very unusual; Milo is usually a more-or-less perma-bear. For him to throw numbers around like this is A) unprecedented, and B) frankly, scary.
It's going much higher before it goes much lower. Take it to the bank. Speculators may have part of the action here, but the real 800-lb gorilla in the rice mkt is the Asian psyche. Asian nations who are running short on rice won't just buy for actual need. No, no, they'll buy in advance of actual need and then they'll buy -- and hugely -- in advance of perceived possible need.
I don't typically feel sorry for other traders in the mktplace. After all, I'm there to take their capital. However, that said, I **really** feel for the shorts in the rice mkt -- they are going to get hammered like they can't believe.
Mid 2000s: Real estate bubble.
Later 2000s: Commodities bubble.
The statist solution is simple. Outlaw speculative bubbles.
Bump!
“Vast amounts of money are flooding the world’s commodities markets, driving up price.”
No they aren’t somebody needs to learn about futures before he opens his mouth. why doesnt he go to the Chicago Board of Trade and get some information.
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"Rice yields globally expanded more than 40% from 1980 to 2000, according to data compiled by the USDA. They've increased only about 5% since then, the data show. Stockpiles will fall to 75.2 million tons, about half of where they were at the start of the decade, the USDA said."
Now there are some people who love to say production is still increasing, while at the same time, ignoring real numbers that show inventories dwindling.
http://www.financialpost.com/small_business/story.html?id=428566
Food for thought.
God knows I'm no bloody Marxist, but with Al Gore and his enviro-loonies on the left and these hedge fund robber-barons on the right -- and food prices up close to 50% in the last six months...
I think it's seriously time for people to get their collective heads out of the anal orifices and start thinking about how to avert what could be a worldwide catastrophe.
No, but rice growing lands are rapidly being converted to the more lucrative production.
http://www.setamericafree.org/wordpress/?p=390
Here’s a link to an interesting article by Bob Zubin, author of “Energy Victory”. To my surprise, there’s been a substantial increase in corn, wheat and soybean planting above the increase devoted to biofuel production. Food and fuel do not seem to be in competition.
I’m not sure that we’re having a classical inflation (The Wall Street Journal editorial board certainly disagrees with me on that). All real asset prices would be rising, including housing. It seems that capital has fled real estate and is now going into commodities, since commodities have risen dramatically while housing and real estate have fallen dramatically.
But there is no commodities bubble yet. Commodities haven't even begun their big rise - this is just the opening dance.
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