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Old 06-23-2009, 04:27 PM   #1
WiNaDeYo
Avalon Senior Member
 
Join Date: Sep 2008
Location: Lombardy, Italy
Posts: 222
Default The Real Crisis is Food

The Real Crisis Is Food: Beginning of the Bull for Agriculture
by: Graham Summers June 22, 2009


http://seekingalpha.com/article/1446...cle_sb_popular

Quote:
The real crisis is coming… and it’s coming fast.

Indeed, it started last year, almost entirely off the radar of the American public. While all eyes were glued to the carnage in the stock market and brokerage account balances, a far more serious crisis began to unfold rocking 30 countries around the globe.

I’m talking about food shortages...

Currently the stocks-to-use ratios for corn and wheat are 17% and 23% respectively. On the surface, this sounds like we’ve got a lot of extra food lying around. But you’d be very mistaken to think that: remember a stocks-to-use of 0% would indicate we’re producing just enough food to meet demand in real time. At that point, one bad harvest and people start starving.

Now, stocks-to-use usually runs inverse to price (if supply goes lower, prices rise). And stocks-to-use for wheat and corn are at their lowest levels since the ‘70s. At that time, grains prices were more than three times as high as they are now.

Make no mistake, agriculture is at the beginning of a major multi-year bull market. We’ve got rapidly growing demand, reduced production, and decade low inventories. I can’t tell you when prices will begin to spike (timing is especially difficult given the degree of financial speculation in commodities), but at some point in the not-so-distant future, food prices will go up… WAY up.

I’ll detail how to profit from this trend in tomorrow’s essay. Until then…

Good Investing!
Here we go, folks!
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