Posted on 10/25/2009 7:10:51 PM PDT by bruinbirdman
Biofuel refineries in the US have set fresh records for grain use every month since May. Almost a third of the US corn harvest will be diverted into ethanol for motors this year, or 12pc of the global crop.
The world's grain stocks have dropped from four to 2.6 months cover since 2000, despite two bumper harvests in North America. China's inventories are at a 30-year low. Asian rice stocks are near danger level.
Yet farm commodities have largely missed out on Bernanke's reflation rally in metals, oil, and everything else. Dylan Grice from Société Générale sees "bargain basement" prices.
Wheat has crashed 70pc from early 2008. Corn has halved. The "Ags" have mostly drifted sideways over the last six months. This divergence within the commodity family is untenable, given the bio-ethanol linkage to oil.
For investors wishing to rotate out of overstretched rallies – Wall Street's Transport index and the Russell 2000 broke down last week – this is a rare chance to buy cheap into a story that will dominate the rest of our lives.
Barack Obama has not reversed the Bush policy on biofuels, despite food riots in a string of poor countries last year and calls for a moratorium. The subsidy of 45 cents per gallon remains.
The motive is strategic. America is weaning itself off imported energy at breakneck speed. It will not again be held hostage by oil demagogues, or humiliated by states that cannot feed themselves. Those Beijing students who laughed at US Treasury Secretary Tim Geithner may not enjoy the last laugh. The US is the agricultural superpower. Foes will discover why that matters.
The world population is adding "another Britain" every year. This will continue until mid-century. By then we will have an extra 2.4bn mouths to feed.
China and Southeast Asia
(Excerpt) Read more at telegraph.co.uk ...
I guess it is deflation today. Tomorrow it will be inflation.
Dr. Malthus, please call your office ...
This is truly insane!
well it solves obesity problem
“....America is weaning itself off imported energy at breakneck speed. It will not again be held hostage by oil demagogues, or humiliated by states that cannot feed themselves....”
Really????
It it gets bad enough people will turn on the Ecology freaks and profiteers that are behind this.
POT was recently downgraded (the company Potash, not the commodity). Agrium (AGU) also warned investors that earnings will drop significantly this quarter.
That idiot should visit a grocery store here and look at prices before he writes such lies!
It’s absolutely unimaginable that POT was set to earn nearly $16 a share about 1.5 years ago...and yet, it was....on its way to over $20. This was roughly coincident with crude oil’s equally amazing rise to $147.
Natural gas?
yitbos
That's what you get when you let the inmates run the asylum.
"The world population is adding "another Britain" every year. This will continue until mid-century. By then we will have an extra 2.4bn mouths to feed.
China and Southeast Asia are switching to animal-protein diets as they grow wealthy, as the Koreans did before them. It takes roughly 3-5kgs of animal feed from grains to produce 1kg of meat."
yitbos
I recall those days not long ago. One master of the universe at GS was expecting oil to reach 200. Perhaps corn kernels were ready to move from bushel pricing to carat pricing.
AEP didnn't say food was cheap. He said it won't ever be cheaper, ie. prices will only go up.
yitbos
Yeah, I went “huh?” at that one, too.
Looks more to me like the Dem strategy for reducing our oil dependency is crashing the economy so there is no one using any energy.
So much for a right to eat. The greenie meanie weenies insist that food must be used for industial energy, not personal human energy.
You are trying to reason with facts. That seems to be a lost cause...
Starting January 1st 2010, Oregonians will be able to buy premium non ethanol contaminated gasoline for their vehicles and choose to no longer participate in the ethanol fraud.
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