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.”