Friday, January 04, 2008
FORGET OIL - THE NEW GLOBAL CRISIS IS FOOD
BMO strategist Donald Coxe warns credit crunch and soaring oil prices will pale in comparison to looming catastrophe
Scott Olson/Getty Images
A new crisis is emerging, a global food catastrophe that will reach further and be more crippling than anything the world has ever seen. The credit crunch and the reverberations of soaring oil prices around the world will pale in comparison to what is about to transpire, Donald Coxe, global portfolio strategist at BMO Financial Group said at the Empire Club's 14th annual investment outlook in Toronto on Thursday.
"It's not a matter of if, but when," he warned investors. "It's going to hit this year hard."
Mr. Coxe said the sharp rise in raw food prices in the past year will intensify in the next few years amid increased demand for meat and dairy products from the growing middle classes of countries such as China and India as well as heavy demand from the biofuels industry.
"The greatest challenge to the world is not US$100 oil; it's getting enough food so that the new middle class can eat the way our middle class does, and that means we've got to expand food output dramatically," he said.
The impact of tighter food supply is already evident in raw food prices, which have risen 22% in the past year.
Mr. Coxe said in an interview that this surge would begin to show in the prices of consumer foods in the next six months. Consumers already paid 6.5% more for food in the past year.
Wheat prices alone have risen 92% in the past year, and yesterday closed at US$9.45 a bushel on the Chicago Board of Trade.
At the centre of the imminent food catastrophe is corn - the main staple of the ethanol industry. The price of corn has risen about 44% over the past 15 months, closing at US$4.66 a bushel on the CBOT yesterday - its best finish since June 1996.
This not only impacts the price of food products made using grains, but also the price of meat, with feed prices for livestock also increasing.
"You're going to have real problems in countries that are food short, because we're already getting embargoes on food exports from countries, who were trying desperately to sell their stuff before, but now they're embargoing exports," he said, citing Russia and India as examples.
"Those who have food are going to have a big edge."
With 54% of the world's corn supply grown in America's mid-west, the U.S. is one of those countries with an edge.
But Mr. Coxe warned U.S. corn exports were in danger of seizing up in about three years if the country continues to subsidize ethanol production. Biofuels are expected to eat up about a third of America's grain harvest in 2007.
The amount of U.S. grain currently stored for following seasons was the lowest on record, relative to consumption, he said.
"You should be there for it fully-hedged by having access to those stocks that benefit from rising food prices."
He said there are about two dozen stocks in the world that are going to redefine the world's food supplies, and "those stocks will have a precious value as we move forward."
Mr. Coxe said crop yields around the world need to increase to something close to what is achieved in the state of Illinois, which produces over 200 corn bushes an acre compared with an average 30 bushes an acre in the rest of the world.
"That will be done with more fertilizer, with genetically modified seeds, and with advanced machinery and technology," he said.
Copyright © 2007 CanWest Interactive, a division of CanWest MediaWorks Publications, Inc.. All rights reserved.
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JUST RECEIVED THE FOLLOWING EMAIL.
Fellow Americans,
In these days of Global-Everything goes -- it may be wise to pause, now and then, and see which way we are heading -- as a country.
I JUST GOT THIS DISTURBING NOTE ABOUT BARACK OBAMA. I SEND IT TO YOU WITHOUT COMMENT BECAUSE I WOULD LIKE YOUR REACTION.
Because I know and trust the man who sent it to me -- I would suggest we all be wary of slick tongues and rosy promises -- and examine, most carefully, the background and true goals of every candidate who thrusts himself/herself before us -- begging for our votes to help them reach the Oval Office and -- extraordinary power.
Who is Barack Obama?
Probable U. S. presidential candidate, Barack Hussein Obama was born in Honolulu, Hawaii, to Barack Hussein Obama, Sr., a black MUSLIM from Nyangoma-Kogel, Kenya and Ann Dunham, a white ATHIEST from Wichita, Kansas. Obama's parents met at the University of Hawaii. When Obama was two years old, his parents divorced. His father returned to Kenya. His mother then married Lolo Soetoro, a RADICAL Muslim from Indonesia? When Obama was 6 years old, the family relocated to Indonesia. Obama attended a MUSLIM school in Jakarta. He also spent two years in a Catholic school. Obama takes great care to conceal the fact that he is a Muslim. He is quick to point out that, 'He was once a Muslim, but that he also attended Catholic school.' Obama's political handlers are attempting to make it appear that that he is not a radical. Obama's introduction to Islam came via his father, and that this influence was temporary at best. In reality, the senior Obama returned to Kenya soon after the divorce, and never again had any direct influence over his son's education.
Lolo Soetoro, the second husband of Obama's mother, Ann Dunham, introduced his stepson to Islam. Obama was enrolled in a Wahabi school in Jakarta. Wahabism is the RADICAL teaching that is followed by the Muslim terrorists who are now waging Jihad against the western world. Since it is politically expedient to be a CHRISTIAN when seeking major public office in the United States, Barack Hussein Obama has joined the United Church of Christ in an attempt to downplay his Muslim background. ALSO, keep in mind that when he was sworn into office he DID NOT use the Holy Bible, but instead the Koran.
Barack Hussein Obama will NOT recite the Pledge of Allegience nor will he show any reverence for our flag. While others place their hands over their hearts, Obama turns his back to the flag and slouches. Let us all remain alert concerning Obama's expected presidential candidacy. The Muslims have said they plan on destroying the US from the inside out, what better way to start than at the highest level - through the President of the United States, one of their own!!!!
Please forward to everyone you know. Would you want this man leading our country?
I won’t be voting for him!!!
HAPPY NEW YEAR!!!
Bobby Palestra 86-34
