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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Crimson Ghost who wrote (4727)1/10/2004 8:40:36 PM
From: russwinter  Read Replies (3) of 110194
 
Despite what Bernanke would have people believe (that the only inflation indicators to watch are Wal Mart SKUs and US employment counts, and that asset inflation doesn't matter, and especially commodities don't matter) the reality is that historically, big inflation periods can also arise from other areas, with food and energy being primary culprits. We've already discussed the energy spike, but be aware that something important is also brewing in food.

Background:

World course ending grain stocks are barely over 100 million MT, by far the lowest in a quarter century. That's about a month's worth of food given current world consumption. It's normally twice that.

The growing season in South America, especially of Brazilian soybeans (20% of world production) is now critical. With already tight stocks, the prospect of a shortfall crop will throw this commodity (and by extension other grains and food) into an even higher spiral, and create worldwide protein shortages and rationing.

This is now the period that soybean begins flowering in the key growing region of Brazil.
spectrumcommodities.com
So far rain has been largely absent. It's getting to be a day by day thing, and definitely something to keep an eye on. NOAA has a weekly report that comes out Monday morning. This is last week's,
cpc.ncep.noaa.gov
and so far little rain this week. The town of Santa Maria in the largest producing Brazilian state, Rio Grande do Sul, hasn't had significant rain since Dec. 21st.

24 hour radar image:
br.weather.com
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