Corn Prices Surge – Adding to Global Food Crisis Unrest
Back in 2008 we saw the world experience a food crisis as commodities soared on rampant speculation financed by the carry trade and sub-prime derivatives. It all collapsed and the world has been blundering from financial crisis after another all over the world. We have also seen food prices go back to those highs with corn up 4.5 percent Thursday and 6.5 percent last Friday. That is a whopping 11 percent in two sessions.
Corn Prices Fuel Inflation
We are now in 2011 and it seems we never learn, we have the middle east crisis that began in Algeria and Tunisia exploding into revolts in Egypt and war in Libya. Yet governments sit idly by.
President Obama even told his American people to basically grin and bare high gasoline prices. The leadership at fiscal and monetary levels, read the financial reserve have done nothing to quell the greed nor the hardship.
The other main reason is the tumbling US dollar, the result of Bernanke’s printing press. If you are looking for a culprit for rising food prices and the resultant unrest go know on Ben Bernanke’s door at the Federal Reserve .Corn soars to post-2008 food crisis highs
The commodity complex have been all soaring and with extreme volatility, a sure sign of speculators and HFT speculators at that being in charge. On the same day corn lept 6.5 pct soy beans slid on news China may cancel exports. Wheat also fell with the pending CFTC Commitments of Traders report giving a good reason for specs to book profit.
Corn Inventories at Low Levels
The rush of corn for ethanol production in addition to feedstock and food demand has seen supplies dwindle. Pressure is also coming from wheat and oats prices also soaring.
America is the largest corn exporter and is seeing it’s corn supplies at the lowest in 15 years.
China alone has been reported as buying 1.25 million tonnes of corn last week. Reports like this further added fuel to this week’s U.S. Agriculture Department’s quarterly U.S. corn stocks coming in lower-than-expected. The effect of this boosted the CRB index and all key sectors in it.
WTI crude oil for example also rallied hard. By Wednesday WTI had traded over $109 a barrel and Brent Crude over $123 a barrel. Clearly hyperinflation is a real issue. Somehow Ben Bernanke and Tim Geithner see none. That gives you an idea of their delusional outlook or intentional truth slaying agenda.
Beef Prices Set to Rise
The inflation worry is across the board with UN Food and Agriculture Organization’s Food Price Index hitting a second straight record in February. Basically whatever you need to live has skyrocketed, grains, energy and food staples.
Expect more unrest in developing nations but also in the U.S. as the US government is not even acknowledging the inflation issue. In guess they don’t ask their chauffeurs what they eat or how much it costs to fill up.
Behind the supply issues though it should be remembered that the USDA has forecast that American farmers will plant the second-largest corn acreage since 1944. Yes in the last two years of World War one.
Corn is not just a staple for bread, vegetables and cooking it is used in feeding lamb, pork, chicken and beef. High corn prices will push corn fed meat prices higher also.
Chicago Board of Trade Corn for May delivery was a 45 cent limit up Friday. The close was a 2-3/4 year high of $7.38-1/4 a bushel, up 6.5 percent n the day.
Each day food and energy prices push higher unchecked the fallout grows more and more likely. The Mid East Unrest may be just the start.
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