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PALLADIUM | 10-31-2009 03:57 AM
Buy food � price rises are almost guaranteed Buy food � price rises are almost guaranteed By Garry White 25 Oct 2009 http://www.telegraph.co.uk/finance/m...uaranteed.html There are two main drivers of commodity prices � supply and demand. This is just as true with soft commodities such as wheat, rice, sugar and cocoa as it is with copper and tin. The big problem for your weekly shopping budget in the future is that there are problems on both sides of the equation that are likely to squeeze prices higher, permanently. However, this also provides a great investment opportunity and now is a good time to buy into many areas of food production and distribution. In September, sugar prices hit a 28-year high after the failure of crops in India due to the poor monsoon season. Prices have fallen about 20pc since then, but are still likely to charge ahead over the longer term. Cocoa prices are also close to a 30-year high after a mixed harvest in Ivory Coast. Production of the bean is expected to be 100,000 metric tonnes lower this year than the 1.22m tonnes produced in the country last year. Weather is partly to blame for the cocoa problem � the other issue is the age of the trees. Older cocoa trees yield less cocoa. These multi-decade highs in food staple prices have been caused by constraints in the supply side of the equation. However, it is the demand side of the equation that provides compelling evidence that prices are trending upwards. In a recent report called The End of Cheap Food, analysts and economists from Standard Chartered have calculated that food production would need to rise by a staggering 70pc by 2050 if the world�s population is to remain adequately fed. The emerging market-focused bank argues that water will become scarcer and restricted availability of arable land will increase imbalances in food production, while rising biofuels production will deny an increasing amount of grain output for human consumption. Whilst food production will continue to rise, the gap between increasing demand and slowing supply will ensure food prices will rise � and stay high, it says. Of course, predictions of imminent food catastrophes are nothing new. In 1798, Thomas Malthus published An Essay on the Principle of Population. In it he argued that the world population would continue to grow, but that land itself was finite. He predicted a nasty cycle of starvation, societal breakdown and mass death and the concept of the Malthusian catastrophe was born. But Malthus was wrong � so far. The Industrial Revolution brought more efficiency to food production and the use of machinery increased crop yields. Then in the 1940s and 1950s there was the so-called �green revolution� where new technologies and seed selection techniques brought India back from the brink of starvation and made Mexico self-sufficient in wheat. The problem for the 21st century is still a soaring global population and the effect that this will have on demand for basic foodstuffs. According to UN research, the world�s population is expected to increase from around 6.7bn today to 9.1bn in 2050. Almost all of this growth is expected to occur in the less developed regions, whilst the population of the more developed regions will remain mostly unchanged, at 1.3bn. The fact that most of the growth in the world�s population will happen in developing countries is significant. As people get richer, their diets change and they eat more meat. This also increases the demand for grains as a feed for livestock. Standard Chartered believes that, with most �new� and available arable land now concentrated in sub-Saharan Africa and Latin America, this will exaggerate existing imbalances between food exporters and importers. The bank believes the Middle East will have to import more foodstuffs, whilst Asia becomes increasingly unable to feed itself and reliant on imports. It concludes that feeding the world is an achievable goal at a global level, but at a cost which will inevitably mean higher prices. Regional variations in food availability will widen, leading to more cross-border investment in the agricultural sector, the risk of protectionist policies and heightened food security concerns for net food importers. At the local level, it thinks food affordability will become a key focus of fiscal and trade policy across the developing countries. While higher prices have positive implications for farm incomes and investment incentives, they will hinder the drive to improve food security for the poor. Food prices are likely to rise and stay high, owners of arable land will see the value rocket and companies involved in the global supply chain will benefit from increasing movement of food from areas of food abundance to areas of food shortage. All aspects of the soft commodity chain will provide fantastic investment opportunities over the next 20 years. Cotton prices on the rise after downpours Unseasonal rain patterns have been affecting all kinds of food crops this year� from sugar to cocoa. Now it looks like particularly heavy downpours in the Mississippi Delta could send cotton prices soaring to a 14-year high. Analysts are warning that prices could jump by 50pc to $1 per pound over the next 18 months, after areas of the US had their wettest September since 1913.Since the beginning of the harvest, cotton prices have sharply risen by 17pc to 68.55 cents per pound. Cotton is ruined by wet weather if too much rain falls when the bolls are open, exposing the fibre to damage. Output may now drop to a 20-year low.

Brio | 10-31-2009 05:34 AM
Re: Buy food � price rises are almost guaranteed This won't help much Oct. 29 (Bloomberg) -- India, the world�s second-largest rice grower, may become a net importer for the first time in 21 years in 2010, potentially sparking the kind of �panic� that sent prices to records in 2008, an agricultural economist said. http://www.bloomberg.com/apps/news?p...d=akOcSQqHMX7M#

Twisted Avatar | 10-31-2009 05:59 AM
Re: Buy food � price rises are almost guaranteed I always buy a extra can Of Black beans and tuna fish when I got to the store. eventually this is going to catch up with us. T

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