Tuesday, August 11, 2009

Charlotte Area Economy

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Saturday, August 1, 2009

Food the New Oil

Sean Brodrick

Forces Line Up to Push Food Prices Higher
New ‘Green Revolution’ Is Starting

Here’s How to Profit!Dear Subscriber, What an amazing time the past 18 months has been for food prices. Worldwide grain reserves dropped to a historic low at the beginning of 2008, and that sparked a price explosion. There were bread riots in dozens of countries around the world, and 25 nations, including some of the biggest grain exporters, imposed restrictions on food exports.Then the combination of a global economic crisis and a bumper harvest deflated food prices as quickly as they went up. The world breathed a sigh of relief. We’re all glad that problem is behind us, right? FAT CHANCE!The fact is food is becoming the new oil! Demand for food is increasing, supply can’t keep up, and the next crisis is probably around the corner ... just like oil!Here’s a big difference — you could maybe live without oil if you had to. You CAN’T live without food.Now, grain prices are scraping bottom. The world has moved on to new crises, ignoring bullish forces in agriculture that are starting to line up again.I’m talking forces like ... Fast-Spreading Disease. A new fast-spreading strain of a wheat fungus that causes stem rust — a harvest-destroying plant disease — that is now being carried by the wind around the world. The Los Angeles Times described the fungus this month as a "time bomb" that could "wipe out more than 80 percent of the world's wheat as it spreads from Africa."Changing diets in emerging markets like China, where 1.3 billion people are eating more food and especially more meat all the time. If you think that doesn’t affect you, think again. There is a global competition for food, and the Chinese want to eat your lunch!How a falling U.S. dollar could supercharge U.S. grain prices. Grain is priced in dollars, so as the buck falls, the prices of corn, wheat and soybeans go up for Americans. But American grains become CHEAPER in foreign currencies as the dollar falls — and this quickly supercharges U.S. grain sales overseas.If these sound like the same forces that push oil prices around — supply problems, increased demand from China and a falling U.S. dollar — you’re right! I’ll say it again, food is the new oil!