Historic drought to bring higher food prices, experts say
 

http://www.foxnews.com/us/2012/07/17...s-experts-say/

The midwest state I reside in has 93 counties that are experiencing drought like conditions. I have over an hour compute to work that is near a major university that has an agriculture school... and the crops around here are starting to suffer.

Punishing drought in Midwest shows no sign of abating
 

http://www.msnbc.msn.com/id/48219314

Punishing indeed! Another blow to the economy that doesn't bode well...

Nostradamus' 169th quatrain warned about this: "There will be drought and exorbitant prices in the land until the Wealthy One defeats the Evil One scarcely a week after All Hallow's Eve in the Year of the London Games."

Exactly my point in posting it......... just thought this approach was a little less controversial... :D

I hear that. ;)

Ethanol producers are already feeling the pinch, some ethanol plants are getting ready to cease production as soon as current corn inventories are depleted. The truth of the matter is that corn is a heckuva lot more valuable as a food stock vs. being treated as an alternative fuel source. Corn is up more than 41% since May thats good news for the seller that is if there will be anything to sell. Farming is one of the biggest crapshoots in the whole world, overall we have had a lot more good years than bad. It's the magnitude of this drought though, it's not unusual to have pockets of drought or bad weather but to be so widespread.

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It's terrible here, and the heat is unrelenting. I think we had a total of 20 minutes of rain in the past month.

Prayers out to all Midwestern members and guests.

We need those higher prices the way you need the heat without rain.

Agree.

It's supposed to rain tomorrow morning (Chicago area) and only 85 degrees...before it goes back up into the high 90's - 100's. I'm ready to move to Alaska.

There's going to be some interesting stuff happening with food moving forward.

We've seen huge price volatility in agriculture in recent years that has all kinds of contributing factors......excessively cheap credit, the effects of Peak Cheap Oil, government policy(ethanol), weather volatility, etc.

I think the current average cost for food in the US is circa 11% of income.

In many places around the world(including the many hundreds of millions of Chinese that are still dirt poor) current average food cost is in excess of 50% of income.

If food prices go up 50% relative to income(taking into account wage inflation) in the US and the wealthy west and people complain.

If food prices go up 50% relative to income in the poorest parts of the world and people go hungry, starve, riot, mutate into failed states, and governments fall.

IIRC Madagascar's government got dropped a few years back....and one of the bigger contributing factors was the economic crisis, rising food prices, and foreign attempts to mass purchase/lease Malagasy agricultural land...so a mix of direct and indirect food/agriculture issues(as well as others) contributed to the fall.

I think if we see food prices whipsaw higher again we will see food capable of being used quite effectively as a geopolitical weapon in a way maybe not too different from energy being used as a geopolitical weapon.

Back in the 80's the US supposedly(genuine/speculation I'm not sure) pushed the Saudis to pump hard, temporarily glutting the energy markets, crashing the price of energy, helping the US economy, while seriously hurting the Soviets main export earner at a time when they were in economic trouble....helping to crash the Soviet Union.

I wonder if there would be any realistic/possible scenarios where big picture policy(such as ethanol maybe?) could quietly and maybe even intentionally shape things to lead to food price spikes......where the wealthy west will complain, but could lead to insurrection in China and elsewhere?

Just my 0.02c......the %'s listed above are as I recall them from the last time I looked into it.

Good thing we are not "the rest of the world," though I have no doubt the current POTUS would love to level the playing field, and his actions and policies are such that instead of raising the standards higher in those other countries, he would rather see fit to lower ours to the level of those dirt poor Chinese you mention.

As for the drought:

We could weather a drought and correlating spike in food prices if everything else was in check; it wouldn't be so bad if it were not so bad.

But eventually the drought will come to an end. If we have learned anything from fluctuating oil prices, that is that food and commodities in general will not revert back to lower prices when that drought is over.

Another issue with the drought is the lack of feed for livestock owners out here in Rocky Mtn states. An old outfitter friend is getting very nervous at the lack of available hay to be found out in these parts. The grass on his property is completely fried from the hot dry summer we're having so he can't put his animals out to graze. If it gets much worse he may be forced to do the humane thing and put down all his horses and mules.

I spoke with other horse owners/breeders on the front range and they too have been searching for grass/hay as far north as Canada with no idea if they'll ever get the feed for their horses in time. The prices for hay are staggeringly high as it is and those who have a extra hay are understandably not letting it go for the time being.

I like that, look for "O" to adopt that as his next slogan. Rumor has it that the govt. may open up the CRP acres to grazing and maybe even baling. The drought will pass but not without a lot of pain.

I KNEW IT!

It's Obama's fault!

Plenty of money sitting on the sidelines doing nothing.
Investing in business is unwise given the uncertainty.

Combine this with rising food prices and ridiculously cheap credit...
You've got prime conditions to inflate a bubble.