Great Depression Online Archive Issue:

Coming to a Market Near You

Great Depression Online
Long Beach, CA
October 26, 2010

Inside This Issue You Will Discover…

*** Food for Thought
*** Just a Matter of Time
*** Coming to a Market Near You
*** And More

Food for Thought

Mahatma Gandhi once said, “There are people in the world so hungry, that God cannot appear to them except in the form of bread.”  Perhaps, if this is true, many more will soon discover God’s presence in a baked loaf of grain.

“A recent surge in corn futures and other commodity prices has triggered concerns about potential jump in food prices,” reported the Dayton Daily News over the weekend.

“In the latest commodities-market lurch, corn prices dropped in early October, then soared later in the month, in response to changing assessments by the federal government of grain supplies and coming harvests.”

~~~~~~Food Crisis Survival~~~~~~

How to Survive the Coming Food Crisis

What would happen if a natural, civil or economic disaster prevented us from growing, transporting and importing food?

Food prices would rise and supermarket shelves would go empty.  Within three days there’d be no food left in most people’s homes.  Chaos and anarchy would break out.  Thousands (if not millions) would starve.

Are you prepared for such a situation? 

~~~~~~~~~~~~~~~~~~~~~~~~~

The government’s assessment of grain supplies changed for the worse.  What’s more, the outlook’s not good…

“We have not yet gotten the final USDA numbers on corn and soybeans yields for 2010, and US numbers can still drop (especially in corn) considering how drastically USDA cut corn yields in the October report,” explained Agriculture.com.  “Typically, once they start cutting in the fall, the trend continues right into the final USDA Jan report.  Right now, there is no room in the corn S/D [Supply/Demand] table to allow any more cuts in production, so any yield cut will be felt directly in the marketplace.”

In other words, any reductions in crop yields will result in increases in food prices.

Just a Matter of Time

There are expectations and there are facts.  First, the expectations…

“Frank J. Guglielmi, spokesman for the Meijer grocery and retail store chain, said short-term spikes in corn and other commodity prices are usually absorbed by producers, wholesalers and retailers, and don’t show up in the form of price hikes on grocer store shelves.”

Now, for the facts…

“General Mills, the maker of Cheerios, Chex and Wheaties, will raise cereal prices on Nov. 15.  The increase will affect about 25 percent of its cereal production and amount to a ‘low single-digit’ percentage, Kirstie Foster, a company spokeswoman, wrote today in an e-mail.

“Prices for some baking mixes are set for ‘a mid single- digit increase,’ effective Jan. 3, Foster wrote.  The company’s product lines include Betty Crocker, Bisquick and Pillsbury.

‘“While General Mills may be the first of the large food companies to really press higher on pricing, we believe many others may follow,’ Growe wrote.  ‘It’s just a matter of time, given what is coming down the pike in the way of inflation.’

Coming to a Market Near You

On November 2nd, while you are placing your votes, the Open Market Committee of the Federal Reserve Board will be placing an enormous bet.  In particular, they’ll be betting that expanding the money supply through quantitative easing – what’s being called QE2 – will stimulate the economy.

Expansion of the money supply is, by definition, inflationary.  However, when talking about inflation, what most people are speaking of is rising prices.  The distinction, while subtle, is important.  Here’s why… 

The Federal Reserve has already expanded the money supply and, with QE2, they will be expanding it further.  Hence, inflation is already here…the money’s already been created…it just needs to find somewhere to go.

Speculators are always on the lookout for market conditions that support increasing price movements.  When they identify them, they place big bets, and accelerate them.  Stagnating crop yields and increasing market demand makes for a ripe opportunity.  And flush with Bernanke’s funny money, no doubt, speculators will be piling in.  In fact, they already are…

The UBS Bloomberg Constant Maturity Commodity Index for farm products jumped 50 percent between June 7th and October 20th, when it set a record by closing at 1,770.479.

With financial markets for farm products hitting record highs, you can count on actual food prices to follow.  General Mills has already sounded the alarm.  Remember where you heard it first.  Food price inflation is coming to a market near you. 

Sincerely,

M.N Gordon
Great Depression Online

P.S.  The thought that the globe’s leading nations (like the United States and Canada) could suffer even a temporary food shortage (no less a prolonged food crisis) seems unthinkable to most people.  Do you realize how close our technology-driven agricultural industry is to experiencing such a crisis?  In fact, it is because our food system is so sophisticated, integrated and advanced that it is so vulnerable.

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