.comment-link {margin-left:.6em;}
Visit Freedom's Zone Donate To Project Valour

Monday, April 14, 2008

Food Prices And Currencies

You know the potential for an Asian currency crisis I claimed could be a consequence of food prices? Read this Bloomberg article:
Record prices for rice, wheat, milk and cooking oil are wreaking havoc with currencies in Southeast Asia, causing a slump in the peso and Indonesia's rupiah. Investors from Deutsche Asset Management to Fortis Investments are dumping their bondholdings on concern inflation will erode returns, putting further pressure on exchange rates. The region has come to depend on strong currencies to contain the rising cost of food and fuel imports.

``You can't just rely on currencies to fight inflation, as there comes a time when they have no potential to appreciate further,'' said Nicolas Schlotthauer, a money manager who helps oversee $5 billion at Deutsche Asset Management, part of Germany's largest bank, in Frankfurt. ``Everyone is so complacent about the fact that if there's inflationary pressure, they will let their currencies appreciate. No one thought of potential currency weakness.''
This is really a serious problem given the other global instabilities.

The net result over six months to a year should be to greatly weaken consumer capacity in several previously quickly growing nations.

Comments:
Our grains feed their livestock who are delivered to our tables and they imagine some beneficial currency arbitrage?

If food is the new lever the US is the new fulcrum.

"Sorry, siahib. Diesel prices mean you cannot get your wheat in Ahbu Dahibi as expected."
 
Egypt has some spare irrigation capacity. I believe some Saudis are getting into wheat farming. Some rather wealthy Saudis got into poultry a while ago.

Wheat - the new gold.
 
About the Saudis, not so. See this: link

If we were smart and had a government at least marginally so, we would make it easy for people to go into farming. We would take all the nonsense restrictions away from small, regional truck farms. We would ditch the restrictions preventing farmers from butchering chickens and such for sale. We would tell the folks behind NAIS to look for another job. We would make it easy for the little guy to farm again. There are young people out there actually interested in these things, if only we could get beyond the idea that only large agribusinesses can make a living at it. I've said on one forum that they should make Joe Saladin Secretary of Agriculture. He's the one who popularized some of this and certainly deserves a listen.
 
Teri - the Egyptian government is trying to get the Saudis to wheat farm there. The Egyptians can irrigate, whereas Saudi Arabia has very little good farmland with water.
 
Good post and comments made, little to add.
 
Ug99 tops Mideast bad news

The news from the Middle East is bad almost everywhere. Iran is tripling its number of centrifuges for processing nuclear fuel. Egypt's municipal elections have seen independent poll monitors arrested amid boycott calls and a very low turnout. And then there are new rumors of military confrontation over Lebanon, with Syria reinforcing its troops in the Bekaa Valley, extraordinary civil defense exercises in Israel, and American warships off the Lebanese coast.

But all these threats pale almost into insignificance by comparison with the confirmation by the U.N.'s Food and Agricultural Organization (FAO) that an organism with the ugly name of Ug99 has crossed the Red Sea.


http://www.metimes.com/Editorial/2008/04/11/ug99_tops_mideast_bad_news/6599/
 
Ug99 tops Mideast bad news

The news from the Middle East is bad almost everywhere. Iran is tripling its number of centrifuges for processing nuclear fuel. Egypt's municipal elections have seen independent poll monitors arrested amid boycott calls and a very low turnout. And then there are new rumors of military confrontation over Lebanon, with Syria reinforcing its troops in the Bekaa Valley, extraordinary civil defense exercises in Israel, and American warships off the Lebanese coast.

But all these threats pale almost into insignificance by comparison with the confirmation by the U.N.'s Food and Agricultural Organization (FAO) that an organism with the ugly name of Ug99 has crossed the Red Sea.


http://www.metimes.com/Editorial/2008/04/11/ug99_tops_mideast_bad_news/6599/
 
Let them eat mortgages.
 
In case you missed it: UN chief: global food crisis is an emergency

UN, like any other gov entity, is a bit behind the curve. Where were they when the food stuff started rising, say, about a year ago? Oil has been high for more than a year (about 2 years, if my memory serves me) when things could have been done more cost effectively.

Both the mortgage mess and now the food crisis are like Katrina: first they ignore or say all is well. Then "things won't get too bad" and then they try to do things incompetently (remember those ice which never got delivered but were warehoused for months?).

Oh well: Those who cannot remember the past are condemned to repeat it. -- George Santayana
 
Danny, the European Environment Agency says that the EU has to cut that 10% biofuels goal.

But Energyecon's news about the rust is the worst. The mobilization begins.

One funny implication of the rust research - the quickest way to do this is with genetic modification. This may the the factor that destroys the organized resistance to gene-modified crops.
 
One funny implication of the rust research - the quickest way to do this is with genetic modification. This may the the factor that destroys the organized resistance to gene-modified crops.

Not in the corners where I read. Resistance to GMOs is sort of like the global warming fanatics. There are definitely folks who think that Monsanto is the "evil empire" and out to get everyone under their thumb.
 
And then there are new rumors of military confrontation over Lebanon, with Syria reinforcing its troops in the Bekaa Valley, extraordinary civil defense exercises in Israel, and American warships off the Lebanese coast.

But all these threats pale almost into insignificance by comparison...
-- energyecon

Can't be that bad. My old college roomie (the one with the Left Behind Fever of 106) hasn't emailed me with "IT'S ALL IN REVELATION! SIX SIXTY SIX! DON'T TAKE THE MARK!" in 24-point boldface yet.

Headless Unicorn Guy
 
Post a Comment

Links to this post:

Create a Link



<< Home

This page is powered by Blogger. Isn't yours?