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Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Global Food Crisis Investing Special

News_Letter / Articles May 11, 2008 - 07:46 PM GMT

By: NewsLetter

News_Letter

Dear Subscriber,

The food riots across the world illustrate the degree to which the world is seeing a shift from cheap food to the early stages of a mega trend in the agricultural sectors that is set to continue for many years. This impact is not just limited to the developing world but people in the developed world have seen their food costs soar by as much as 50% over the last 12months.


The Market Oracle Newsletter
April 26th , 2008            Issue #12 Vol. 2

Global Food Crisis Investing Special


Dear Subscriber,

The food riots across the world illustrate the degree to which the world is seeing a shift from cheap food to the early stages of a mega trend in the agricultural sectors that is set to continue for many years. This impact is not just limited to the developing world but people in the developed world have seen their food costs soar by as much as 50% over the last 12months.

The primary driving forces for the agricultural commodities boom are -

* Bio-Fuels - As crude oil hits another all time high of $119, the world is seeing a dash towards bio-fuels such as ethanol, this shift in allocation of food production towards fuel is one of the primary forces for the surge in food prices and given that the trend in crude oil is unlikely to revert in the phase of Peak Oil, the shift in production towards bio-fuels is expected to continue for many years if not decades.

* China and Indian Demand - The economic boom in China and India is resulting in increase in food consumption as the 2 billion plus consumers demand a more varied diet more in line with the developed world.

* Return of the Food Mountains - The 1980's were renowned for huge food mountains across Europe, as the European Community bought up excess supply so as to stop food prices from collapsing in the face of over production by the heavily over subsidised food industry. Now in the wake of food riots and shortages, many countries, including the key exporting countries are seeking to build up their own food mountains so as to counter the likelihood of short-term shortages. This has the effect of driving prices higher as supply is being taken out of the market which makes less available on the world market.

* Disruption of food production due to global warming. Global wheat stocks have fallen to 20 year lows as the trend towards global warming continues, so will the trend towards more expensive food production costs as the weather patterns change across the world resulting in the increase in poor harvests. Global warming means most countries will be losers such as the US, and Asian countries, but Russia and Canada are expected to reap a bumper harvest as more land is made feasible for agriculture use.

* Rising Inflation - The US subprime sparked credit crisis has resulted in the US Fed's abandonment of the Dollar towards attempts at averting a deep recession. The strategies deployed of cutting interest rates and increasing the money supply are highly inflationary. Other central banks across the world are following the US Fed's example by adopting similar inflationary policies.

* Investment & Speculation - Increasingly investment funds are being re-allocated towards the Foods sector in recognition of the expected out performance against weak sectors such as the Financial's.

The easiest way for investors to gain a long-term exposure to the agricultural commodities boom is through the wide range of available Agri-Foods ETF's.

This weeks FREE Special is on How to Survive and Make Money in a Recession. This report made available to our readership for Free includes 3 videos by Bob Prechter and premium content worth $59.

Your Agri-Foods investing analyst

Nadeem Walayat,
Editor of The Market Oracle

In This Issue
  1. US Hot Dry Summer Forecast Bullish for Energy and Agricultural Investments
  2. Plunging Resource Supplies Results in Soaring Profits
  3. How to Protect Yourself and Profit from the Global Food Price Crisis
  4. Global Food Crisis- Hunger Plagues Haiti and the World
  5. Global Grain Prices Reach Record Levels– Fuel Boom In Agricultural Sector
  6. Causes of Global Food Crisis- Time for Honesty!!
  7. Global Food Crisis- How to Protect Your Portfolio
  8. Why Food Prices will go through the Roof in coming Months
  9. Agricultural Commodities Correction Buying Opportunity
  10. Food Inflation Set to Rise Further and How Best to Invest in Agriculture
1. US Hot Dry Summer Forecast Bullish for Energy and Agricultural Investments

By: Joseph_Dancy

Several of the sectors we are invested in are extremely weather dependent. The fortunes of the firms in these sectors will hinge to some extent on weather conditions 3-6 months in the future. Firms operating in the agriculture sector are the obvious ones that will be impacted by weather conditions. Less obvious is the impact weather has on the natural gas sector.

Read Article

2. Plunging Resource Supplies Results in Soaring Profits

By: Yiannis_G_Mostrous

The most powerful stories in fiction, as well as in investing, have always been simple: love, hate and war for the former; demand, supply and basic needs for the latter. And no story fits the bill better than food and agriculture, for which demand is ever present.

Read Article

3. How to Protect Yourself and Profit from the Global Food Price Crisis

By: William_Patalon_III

When the leader of the United Nation's World Food Programme warned that a "silent tsunami" of hunger is sweeping the globe because of soaring food prices, a lot of folks probably viewed it as just another clever sound bite tossed off by a bureaucrat.

Read Article

4. Global Food Crisis- Hunger Plagues Haiti and the World

By: Stephen_Lendman

Consumers in rich countries feel it in supermarkets but in the world's poorest ones people are starving. The reason - soaring food prices, and it's triggered riots around the world in places like Mexico, Indonesia, Yemen, the Philippines, Cambodia, Morocco, Senegal, Uzbekistan, Guinea, Mauritania, Egypt, Cameroon, Bangladesh, Burkina Faso, Ivory Coast, Peru, Bolivia and Haiti that was once nearly food self-sufficient but now relies on imports for most of its supply and (like other food-importing countries) is at the mercy of agribusiness.

Read Article

5. Global Grain Prices Reach Record Levels– Fuel Boom In Agricultural Sector

By: Joseph_Dancy

The upward trend in grain and food prices continued last month. Many exporting countries limited agriculture exports, or raised export taxes, to insure adequate domestic supplies. Global inventories of most grains remained at low levels – levels not seen in decades.

Should adverse weather in any of the major global grain producing regions impact this summer's crop, a crisis may erupt in the agriculture sector – which is already under enormous strains. Last month the following developments occurred:

Read Article

6. Causes of Global Food Crisis- Time for Honesty!!

By: Brian_Bloom

Causes of Global Food Crisis- Time for Honesty!!
This was one of the drivers: “Biofuels Security Act of 2007 - Amends the Clean Air Act to replace provisions prescribing the volume of renewable fuel that gasoline sold in the United States must contain with provisions that require the Administrator of the Environmental Protection Agency (EPA) to determine the applicable volume for 2010 and beyond. Requires such [renewable fuel] volume to be at least 10 billion gallons in 2010, 30 billion gallons in 2020, and 60 billion gallons in 2030.

Read Article

7. Global Food Crisis- How to Protect Your Portfolio

By: Money_and_Markets

Sean Brodrick writes: The United Nations' Food and Agriculture Organization (FAO) said that world cereal production may jump a record 2.6% this year as farmers boost plantings.

In other words, supply is fine.

Read Article

8. Why Food Prices will go through the Roof in coming Months

By: F_William_Engdahl

A deadly fungus, known as Ug99, which kills wheat, has likely spread to Pakistan from Africa according to reports. If true, that threatens the vital Asian Bread Basket including the Pu nj ab region. The spread of the deadly virus, stem rust, against which an effective fungicide does not exist, comes as world grain stocks reach the lowest in four decades and government subsidized bio-ethanol production, especially in the USA, Brazil and EU are taking land out of food production at alarming rates. The deadly fungus is being used by Monsanto and the US Government to spread patented GMO seeds.

Read Article

9. Agricultural Commodities Correction Buying Opportunity

By: Ned_W_Schmidt

Corrections are a friend of investors. Same is true for professional traders. Traders on Main Street enjoy them less. Learn to take advantage of them, rather than be buffeted by them. Investors should be anticipating any possible correction in their favorite industries in order to make timely purchases. Currently, for example, the Agri-Food sector may be developing one of the first good corrections in some time. Cash prices for many Agri-Food commodities have retreated.

Read Article

10. Food Inflation Set to Rise Further and How Best to Invest in Agriculture

By: Michael_Pento

There was a clear consensus emanating from the annual U.S.D.A. Agricultural Outlook Forum, which I attended in Arlington, Virginia last week: most in attendance believed that food prices will continue their assent of last year (4%) and perhaps rise by another 3.8%-4% in 2008. U.S. food price inflation will be the result of increasing cost pressures from higher agricultural input prices. These prices, in turn, are the result of strong global demand, continued weakness in the U.S. dollar, the push for renewable energy, low stock-to-use-ratios and global weather that has not been conducive to crop growth in certain regions.

Read Article

 

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