Re those "food shortages": The US planted less wheat last year than in any year since 1960 but one.

[Hannah Bell]

The low was 1970: 17,651,000 hectares planted.

The high was 1982: 32,618,000 hectares planted.

Area Harvested 1960/61 v. 2010/11 (1000 HA)

US: 21,012 v. 19,278
Ca: 9,930 v. 8,269

Production 1960/61 v. 2010/11 (1000 MT)

US: 36,877 v. 60,103 (+63%)
Ca: 14,108 v. 23,167 (+64%)

Yield 1960/61 v. 2010/11 (MT/HA)

US: 1.76 v. 3.12 (+77%)
Ca: 1.42 v. 2.80 (+97%)

Domestic consumption 1960/1 v. 2010/11 (MT)

US: 16,082 v. 32,006 (+99%)
Ca: 4,256 v. 8,200 (+93%)


http://www.fas.usda.gov/psdonline/psdQuery.aspx


Exports as percent of total production 1960/61 v. 2010/11

US: 48% v. 59%
Ca: 68% v. 76%

[notadmblnd]

1. So does this mean that TPTB are going to intentionally cause shortages to run up prices?

[Hannah Bell]

2. it means that the apocalyptic shadings on the news lately are hype.

and i'd guess the hype is aimed at justifying price hikes (& deaths) due to speculation.

the data doesn't match the hype.

http://www.fas.usda.gov/psdonline/psdResult.aspx

also tells me that the US has made a deliberate choice to maintain lower reserves. i assume to hold up world prices a/o decrease cost of storage (perhaps due to consolidation in the elevator business)

[girl gone mad]

3. They did the same thing w/ oil in 2007.

CNN was pimping peak oil big time, along with many major publications.

It's interesting to note that Paul Krugman was also denying that run up was the result of speculation.

[Hannah Bell]

4. and with food. remember the "rice shortage"? but world rice production has

outstripped consumption for the last 5 years.

http://journals.democraticunderground.com/Hannah%20Bell/22

yeah, i seem to remember krugman doing something similar the last time around.

also interesting to me that china is maintaining big food reserves. for example, they've got 55% of their yearly wheat consumption in storage.

http://www.fas.usda.gov/psdonline/psdQuery.aspx

maybe they know something we don't. like asshole banksters playing games with food.

[lonestarnot]

6. That is very interesting.

[Warren Stupidity]

15. it is commodity speculation by financial interests

with no direct interest in producing or consuming the commodities, a practice that was actually outlawed in the US in 1936 but quietly re-introduced by secretly granting certain wall street firms the right to engage in such speculation again in the 90's and was then opened up to unregulated idiocy by the Commodity Futures Modernization Act of 2000.

The problem with speculation in commodities is that there is a built in bias against short trading - commodity speculation distorts the market and pushes prices up higher.

Why this bias?

"Although quants are not terribly interested in the transient economic drivers of market dynamics or trading psychology, here is an interesting thought from Mike Master’s testimony. A typical commodity trader initiating a new trade is pretty much insensitive to the price of the underlying. He has, say, a billion dollars to “put to work,” and doesn’t care if the position he ends up holding has five million or ten million barrels of oil. He never intends to take delivery. This price-insensitivity amplifies his impact on the market, and the investor appetite for commodities increases as the prices go up."
http://www.thulasidas.com/2008-09/commodity-prices-whos-holding-the-cards.htm

The speculator in commodities is neither a producer nor a consumer of these 'assets', odd assets that the actual involved parties produce and then consume.

[FedUpWithIt All]

10. There have been very serious droughts, floods and fires all over the world in the last few months.

There are increasing "once in a lifetime" events beginning to happen on a regular basis. Food production, world wide, is certainly down due to unforeseen events and is not simply hype.

[Hannah Bell]

23. there are *always* serious droughts, floods & fires somewhere in the world.

in 2008 supposedly there were "once in a lifetime" natural disasters which devastated the rice crop.

but it was complete bullshit:

http://journals.democraticunderground.com/Hannah%20Bell/22


From 1960 to 2010, world population increased 121%, world wheat acreage increased 10%, & world wheat production increased 177%.

[FedUpWithIt All]

28. ...

Australia's and Pakistan's flooding were unprecedented. And events like that are on the rise.

[Hannah Bell]

33. Pakistan's flood were in 2010. It exported food in 2010.

Reports of natural disasters give you almost no information about the state of the world food supply.

[FedUpWithIt All]

34. That is not exactly how it works

There was an inability to get a fall crop in for a 2011 grain supply due to the damage of over 17 million acres of cropland were submerged and more than 1 million acres were destroyed. Pakistan lost 200,000 head of livestock and over 500,000 tons of stored wheat and massive amount of stored animal grain.

Edited to add that this is just for Pakistan. It does not include the fact that Russia reported that more than a third of their crops were destroyed last year, which will certainly reach into this year. The numbers are not really in yet for the once in a lifetime cyclones and floods hitting AU of the drought now destroying the crops in China.

[Hannah Bell]

36. here's the data:

World Population growth 2005-2010: +5.7%

Growth of global harvest of corn, wheat & rice 2005-2010: +10%

Growth of total supply corn, wheat, rice 2005-2010 (includes reserves): +11.9%

World harvests of rice & corn went up 2010/11 over 2009/10.

The only harvest of these three major traded grains that was down was wheat.

A portion of that can be attributed to the fact that about 4 million fewer hectares of wheat were planted v. 2009/10.

About half that decrease in acreage was the US & Canada, two of the biggest traders.

You can check my figures here:

http://www.fas.usda.gov/psdonline/psdQuery.aspx

As i said before, random reports about natural disasters tell you almost nothing about the world food supply or harvest.

[MadHound]

12. No, it means that last year more farmers planted their acreage in corn rather than wheat.

Because at the beginning of the season farmers knew that corn prices were rising (thanks ethanol), and nobody had a clue that the wheat crops of Russia, China and Australia were going to tank.

Worse yet, now that there was massive planting of winter wheat (because the farmers knew last fall that wheat was going to be tight), a lot of that crop may not survive because of the hard, heavy winter in the Midwest. We'll see in the spring.

I imagine that you will be seeing more wheat planted, along with more corn, as more and more acreage is brought out of pasturage, lying fallow, or CRP programs.

[pipoman]

24. The winter wheat here looks pretty good now

There was a question in the fall because of slow germination due to low moisture. Usually there is 30-45 days of wheat pasture grazing in the fall, it didn't happen last fall. Now we have had enough snow and last week it was looking pretty good. Winter wheat is pretty hearty...drought while growing or prolonged heavy moisture at harvest time is about the only things that will really destroy it. Our area is actually the perfect area for winter wheat. We have a long enough growing season and enough moisture to allow for a follow up crop after harvest of the wheat. Most farmers here plant milo on dry land, corn or even soy beans on irrigated land as the second crop.

[Hannah Bell]

39. actually, total acres planted were down.

[provis99]

5. yes, but wheat production is much higher than in 1960.

So I'm not sure what you're getting at. A lot of acreage formerly used to grow wheat is now used to grow pulses, particularly soybeans.

[Hannah Bell]

7. really? yields are bigger than in 1960? do tell.

the us planted more wheat two years ago than it did last year.

what i'm getting at is that the recent scare stories cherry-pick their "facts" -- to scare people.

decisions about how much acreage to plant in what, how big the reserves will be, etc. -- these are *political* and *economic* decisions, mostly based on price & profit.

they're not decisions *forced" from any basic scarcity, or from "global warming" or "peak oil" or anything else. it's about money & politics & power.

[farmbo]

11. 2,208,391,000 US bushels produced in 2010...1,354,709,000 in 1960

http://www.nass.usda.gov/Statistics_by_Subject/result.php?739ECD5D-4641-3D15-AA41-E64A5856106E§or=CROPS&group=FIELD%20CROPS&comm=WHEAT

Unfortunately, the wheat crop in Queensland South Australia has been flooded out and Russia's crop is weak.

And don't forget those Hedge Fund Dandies... I'm sure they're long on the Sept 2011 futures.

[Hannah Bell]

22. you need to check your sarcasm detector.

[A HERETIC I AM]

38. Ummmmm....just an FYI....

There is no "Queensland South Australia"

Queensland is a state.

So is South Australia.

The floods occurred primarily in Queensland, which is relative to the Mid-Atlantic States up thru New England as South Australia is relative to Texas, OK, and KS.




See that little cross hair right smack dab in the middle?

I used to live there.

[leftstreet]

8. Food, speculative capital, multinational corporations = what could possibly go wrong?

:banghead:

K&R

[Starry Messenger]

9. k&r

[doc03]

13. There are hundreds of thousands of farmers being paid not to

grow anything. Wheat subsides $30.7 billion for 1,375,252 recipients from 1995-2009.



edit for link: http://farm.ewg.org/region.php?fips=00000

[MadHound]

14. Actually that number is going down dramatically.

With the advent of ethanol, farmers are bringing lots of land back into production, taking it out of CRP and other such programs.

[doc03]

16. Why on earth would you us food for fuel, it's insane, n/t

[MadHound]

17. Oh, I agree,

But it's making farmers money, so they're going to plant the crop. In fact they're planting so much corn, year and year, for the past four, five years, that we're going to see some serious soil crashing in the near future. Corn is one of the harder crops on soil, and you can't continue to plant it in the same field, year in, year out.

But it is fueling another farming bubble. Farmers are making money, and thus starting to feel safe enough to buy new equipment, or more land, mostly on credit of course. My guess is that sometime within the next five years the ethanol/corn market is going to be pulled out from underneath them, leaving a lot of the few remaining small farmers high and dry. It will be the '70's and '80's all over again, selling family farms on the courthouse steps to Monsanto and the other big industrial farmers.

Not to mention that ethanol really messes with some engines, especially two stroke engines. I've had to replace the fuel hose on my chainsaw, and the carburator on my two year old weed whacker because ten percent ethanol was degrading the rubber seals. Stihl and other manufacturers have supposedly reworked the composition of their rubber, but now the push is on to up the ethanol percentage to fifteen percent. It also messes with four stroke engines. If you leave them sitting to long the ethanol separates out, and when you first start the engine it sucks in a dose of pure ethanol, and blows out the engine. So you've got to stir up the gas in your tank, which is easy enough on a motorcycle,ATV or riding lawnmower, but you can't really stir the gas in the tank of a car:shrug:

[doc03]

18. It may not be like this where you are but I have yet to ever

meet a farmer that wasn't a Republican and didn't bitch about other people living off of government handouts. One my neighbors is on the list for $67,000 in subsides, he sold coal rights for hundreds of thousands a few years ago now has two marcellus shale gas well pads going on his property. He is a teabagger and ran for county commissioner last year.
on edit: Never paid a dime for his property it has been passed down through the family since Ohio was territory.

[MadHound]

20. Oh, I know several quite liberal farmers,

They're doing the organic farming, the CSA's and other such small farm operations. I also know quite a number of old school farmers who are pretty liberal, Roosevelt Democrats and such.

[DURHAM D]

19. I inherited 160 acres recently.

We grow mostly wheat and some milo and just a little hay. The price of wheat right now is shockingly high. (Unfortunately I don't have any left up at the elevator.)

But, I have a question. Do you think right now would be a good time to sell the land or should I hang on to it? The per acre value is higher than I have ever seen it. I have three farmers (including the tenant farmer) who would buy it tomorrow. Would you hold or sell?

One other thing - I have a couple of producing wells (strippers) but it doesn't amount to that much given that they have been pumping for 70 years. On the other hand they are currently under lease for possible future exploration but I don't really expect much to ever come from it.

JFTR - For those promoting a big conspiracy theory - my farmer and I decide how many acres to plant in what grain each year.

[defendandprotect]

21. K/R

[bhikkhu]

25. Overall, there are several factors driving prices

There were unexpected crop failures due to weather, the price of the "inputs" (chiefly the price of oil for fertilizer and transport) have been on a long-term increase, and biofuels continue to turn food to fuel, and to occupy farmland that might otherwise be used for food crops.

I certainly wouldn't argue that speculators are looking at the various factors and trying to make a buck off them (at all of our expenses), but that has always been the case. I don't know whether it serves a purpose to point one single finger of blame on people who have little to do with the weather, the price of inputs, increasing demands for petroleum substitutes, and the simple market driven habits of farmers. If the speculators were gone, food prices would likely still increase.

[Hannah Bell]

26. The main factor driving prices of inputs & food is financial speculation.

There's a long, long history, & every single time there's the same bullshit about the weather, crop failures, rising prices of inputs, etc.

If you look at the production figures there's no reason for the spikes we're seeing.

[bhikkhu]

29. I suppose that's similar to saying its "market dynamics" at work

or just the trend of prices for anything where demand exceeds supply - or in this case where there is a suspicion that demand might exceed supply at some point. I would agree that the food markets should be protected from this.

As it is said that the price rises are more or less inevitable, the effects of them will probably be disproportionate; the US is one of only a handful of countries who are strong net exporters of food, and we are about as wealthy as the others. So there should be no real shortages here, and I'd expect a collection of local and state sponsored help to keep hunger here at a level below the danger level (as far as civil society goes). I can't afford much in the way of extra food bills myself, so I am planting a much bigger garden this year.

Countries which rely on food imports (which is most of the countries of in the world) will have a tough time depending on how much money they have. As real shortages may not materialize, it may come down to how much a poor country will give up or negotiate away for the sake of feeding its population. In the past, the big exporters, working hand in hand with their industrial corporate partners, have gained access to substantial resources, wealth, and territory in similar times.

[Hannah Bell]

31. no, it's not the same as saying "market dynamics" are at work.

[bhikkhu]

37. I prefer farmer's markets anyway

That avoids speculators pretty well - in most areas you can find a farmer's market where you can buy directly from the grower and bypass all the middlemen. That and growing your own food as much as you can reduces dependence on companies who by nature care only for your money, not your health or your life.

[Ghost Dog]

27. What you say is true. But the nature and extent of the speculation

appears to have changed beyond all proportion in recent years. The following article by Ellen Hodgson Brown paints a very dark picture:

http://www.webofdebt.com/articles/egyptian_tinderbox.php

... "Goldman . . . came up with this idea of the commodity index fund, which really was a way for them to accumulate huge piles of cash for themselves... Instead of a buy-and-sell order, like everybody does in these markets, they just started buying. It’s called "going long." They started going long on wheat futures... And every time one of these contracts came due, they would do something called "rolling it over" into the next contract... And they kept on buying and buying and buying and buying and accumulating this historically unprecedented pile of long-only wheat futures. And this accumulation created a very odd phenomenon in the market. It’s called a "demand shock." Usually prices go up because supply is low... In this case, Goldman and the other banks had introduced this completely unnatural and artificial demand to buy wheat, and that then sent the price up... (H)ard red wheat generally trades between $3 and $6 per sixty-pound bushel. It went up to $12, then $15, then $18. Then it broke $20. And on February 25th, 2008, hard red spring futures settled at $25 per bushel...(T)he irony here is that in 2008, it was the greatest wheat-producing year in world history.

". . . (T)he other outrage... is that at the time that Goldman and these other banks are completely messing up the structure of this market, they’ve protected themselves outside the market, through this really almost diabolical idea called "replication"... Let’s say,.. you want me to invest for you in the wheat market. You give me a hundred bucks... hat I should be doing is putting a hundred bucks in the wheat markets. But I don’t have to do that. All I have to do is put $5 in... And with that $5, I can hold your hundred-dollar position. Well, now I’ve got ninety-five of your dollars... (W)hat Goldman did with hundreds of billions of dollars, and what all these banks did with hundreds of billions of dollars, is they put them in the most conservative investments conceivable. They put it in T-bills.... (N)ow that you have hundreds of billions of dollars in T-bills, you can leverage that into trillions of dollars... And then they take that trillion dollars, they give it to their day traders, and they say, "Go at it, guys. Do whatever is most lucrative today." And so, as billions of people starve, they use that money to make billions of dollars for themselves."

/... http://www.webofdebt.com/articles/egyptian_tinderbox.php

[cali]

30. The larger problem is the Chinese wheat crop. n/t

[Hannah Bell]

32. the larger problem is our dishonest media.

[SidDithers]

35. But harvested 63% more than in 1960/61...

with a yield / HA that's 77% higher.

So, they're making more using less land. Isn't that a good thing?

Sid