Wednesday, February 2, 2011

Global Food Shortage?

O beautiful for spacious skies,
For amber waves of grain,
For purple mountain majesties
Above the fruited plain!
- lyrics to America the Beautiful
Lately I've been seeing a lot of stories about inflationary food prices and possible food shortages globally. World production is not much greater than demand so if there is bad weather, fungus, insects, or anything destroying crops on a large scale, it tips the world balance to shortage.

For a look at big picture check out the Food Prices page at the Financial Time (FT.com). The site does require registration but there is a free option if you scroll the screen all the way to the right when registering. Sadly FREE is limited to 10 stories a month.

Here's a summary from one of the lead stories.

The world has moved a step closer to a food price shock after the US government surprised traders by cutting forecasts for key crops, sending corn and soybean prices to their highest level in 30 months. The price jump comes after the UN’s Food and Agriculture Organisation warned last week that the world could see repetition of the 2008 food crisis if prices rose further. The trend is becoming a major concern in developing countries.

And this gloomy forecast is actually optimistic!!! The US projection of expected World harvests does not account for future weather problems. “There’s just no room for error any more. With any kind of weather problem in the upcoming growing season we will make new all-time highs in corn and soy, and to a lesser degree wheat futures.”

See also Dinner Without Onions In India?

Bottom Line

This looks like a good time to stock up on rice and grains before prices rise further.

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