Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: elmatador who wrote (78058)	4/20/2008 3:44:39 PM
From: arun gera	Read Replies (2) of 116555

>Food is expensive because the world wasn't prepared to see millions of Chinese, Indians, Africans, Brazilians and Latin Americans eat," LULA told reporters.> China (18%), India (10 percent), and Brazil (2 percent) account for 30 percent of grain production per year. USA is at 17 percent, Canada and Australia are at the same level as Brazil. I was surprised to see that China is producing more grain than USA! fao.org And the growth rates in production have been good for China, Brazil, and India. faostat.fao.org There was a shortfall in Australia production this year. But Australia is only 2+ percent producer. I don't have the demand data, but there was not this sudden growth in Indians and Chinese eating more or switching to non-vegetarian diet that is causing the inflationary problem. The main change is that farmers in the US shifted 1/3rd of their corn production to ethanol production. And maybe additional from wheat or soyabean to corn. That shift is worth at least a few percentage of world production (2-3 percent). That is bigger than the drop in overall production from normal growth patterns (about 1 percent less growth this year than last year). So I still feel that the ethanol policy (and speculation in commodities) are causing this recent inflation in grain prices rather than any underlying real "food" demand or supply. Needs more investigation though. -Arun

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