BMO Financial Group strategist Donald Coxe warns that the current credit crunch and soaring oil prices will pale in comparison to a looming shortage of food.
Again, I’ve included a podcast, just in case you’d rather listen: food-prices.mp3
Investors are being warned, a global food catastrophe is emerging, a dire prediction he dropped on the Empire Club’s 14th annual investment outlook meeting in Toronto.
Coxe blames heavy demand from the biofuels industry, and the growing middle classes of countries such as India and China. To keep up with the demand, he says food output needs to be expanded dramatically.
It’s not the $100 dollar oil we have to worry about, but a surge in prices of consumer foods. He says consumers have already spent 6.5% more for food in 2007.
According to Coxe, corn is at the center of the gathering storm. He claims the price of corn has risen about 44% over the past 15 months, closing on January 4th at $4.66 a bushel. That, he says, impacts not just food products using grains, but meat prices too. Livestock are eating more expensive food these days, and we’ve already seen an increase in the price of eggs, for instance, and other meat products at the stores where we shop.
Biofuels, according to Coxe, are expected to account for about a third of 2007’s grain harvest. Wheat prices, he says, have risen 92% in the last year, closing this week at $9.45 a bushel on the Chicago Board of Trade.
Who will benefit during this period? Coxe says the nations who have food will have the edge, and that includes the United States. He said, “You’re going to have real problems in countries that are food short, because we’re already getting embargoes on food exports from countries, who were trying desperately to sell their stuff before, but now they’re embargoing exports.”
While not naming them, Coxe said there are about two dozen stocks in the world that will eventually redefine the world’s food supplies. He continued, “You should be there for it fully-hedged, by having access to those stocks that benefit from rising food prices.”
Coxe warned investors, “It’s not a matter of if, but when. It’s going to hit this year hard.”
Planetsave? With an ad for JOhn McCain in the header? Hmm.. And a post about the badness of biofuels? Give me a break.
I can’t believe either, that you’re there worrying about stock prices.
Yeah, this is a big problem. If corn and wheat are going up then the poor will have nothing eat. They are staple crops and it makes me very nervous for third world countries.
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Thanks for your interest!
And Max, thanks for the great post.
Where can i sign up for a planetsave mail adress ?
Anthony J. Gerst
A good post. Max, being from a corn porducing state I see many things wrong. I do not endorse corn as the primary bio-fuel, I endorse cellulosic crops for this. The bottom line is simple enough, we still have excess corn production.
The big worry should be focusing on wheat. Last years climatic devastation of the crop has been felt around the globe. Be it corn, wheat, soybeans or rice, food stocks will prove to be the next great crises we as a planet face.
As always, I support and endorse the growth of Industrial Hemp, primarily on marginal land and used to supply the planets paper products to start off with. This viable crop which can be grown in all temperate climates, would at least put money in the pockets of poor people across the globe. I am aiming mainly at the equatorial regions with that statement. It would at least imporve their livelihood to the point of being able to better feed themselvs; as food prices soar–based upon the nurturing nature of Mother Gaia. Industrial Hemp would help bring about balance to the biota, hence allowing us a more stable climate for crop production.
Watchdog 316 Citizen Journalist
India, where they are advancing ag co-ops. Would be the most logical place to start hemp production for paper usage. They need factoral jobs, they really need to help the rural community. On top of this, with their infrastructure still playing catch up, so that food crops usually rot before making it to market. Hemp offers a crop that be easily transported and stored for long durations.