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Soaring fertilizer prices are set to push up the price of food.

US-HEALTH-VIRUS-ELDERLY — With the price of fertilizer increasing, food prices will follow | Chandan Khanna/AFP via Getty Images

LUXEMBOURG — It’s not just your heating bill that risks going up thanks to Europe’s energy crisis; EU ministers are now warning that the power price surge means your food will be more expensive in the coming months too.

At a meeting of European farm ministers in Luxembourg on Monday and Tuesday, there was consensus that the sky-high price of natural gas is ramping up the cost of fertilizers, and that this increase is likely to land squarely on consumers’ plates. Natural gas is the key feedstock for the production of some of the most common artificial fertilizers, such as urea and ammonium nitrate, which farmers rely on to keep up Europe’s crop yields.

“The increase of energy prices: This is the main reason for the increase in fertilizer prices, and of course it can impact food prices in the future, of course this is the risk,” EU Agriculture Commissioner Janusz Wojciechowski said on Monday during the EU Council meeting, where ministers from the 27 member countries gathered.

EU farm ministers discussed a document circulated by the Polish government — obtained by POLITICO — which predicted that the fertilizer crisis will trigger “social unrest” across the entire European Union unless policymakers halt the soaring cost of natural gas. Warsaw blamed its traditional enemy Russia for the price surge, alleging the export giant Gazprom was restricting supply. (The Russian company says it’s fulfilling the terms of its export contracts with EU countries.)

…click on the above link to read the rest of the article…

Yet another worry: Price of ship fuel is now highest since 2014

October 11, 2021

Yet another worry: Price of ship fuel is now highest since 2014

Bunker surcharges on the rise for shippers of containerized cargo

shipping fuel — Ship refueling (Photo: Shutterstock)

Commodity prices are surging around the globe, so it should come as no surprise: Marine fuel is getting a lot more expensive. That’s bad news for ship operators on the cost side, and, in the container business, yet another headache for cargo shippers.

Marine bunker prices are “soaring,” said Alphatanker on Thursday. “This has not just impacted 3.5% [high-sulfur fuel oil or HSFO] but also 0.5% VLSFO [very low sulfur fuel oil].

“There are expectations that crude, and therefore marine fuel, could move higher in the coming weeks as oil markets tighten further,” warned Alphatanker, adding, “This will undoubtedly clip gains in tanker earnings.”

All ship categories, not just tankers, are taking a cost hit. On Thursday, the S&P Global Platts T4 index estimated that a Capesize (a dry bulk ship with capacity of around 180,000 deadweight tons) burning VLSFO was spending $24,596 per day on fuel.

Ships equipped with exhaust-gas scrubbers are still able to burn cheaper HSFO under IMO 2020, a regulation that went into force for all commercial ships on Jan. 1, 2020. According to the Platts’ T4 Thursday assessment, scrubber-equipped Capes were paying $22,815 per day for fuel.

Why pricing is up and where it’s going

“The main driver for bunker pricing is the price of oil — that’s the key,” said Martyn Lasek, managing director of Ship & Bunker, a company that provides pricing data. “If you look at the relationship between Brent and VLSFO, it’s now pretty solid. There’s an established price trend.”

American Shipper asked Richard Joswick, head of global oil analytics at S&P Global Platts, where the price of crude — and thus ship fuel — is going.

…click on the above link to read the rest of the article…

Fertilizer Prices Hit Record Highs, May Pressure Food Inflation Even Higher

October 11, 2021

Fertilizer Prices Hit Record Highs, May Pressure Food Inflation Even Higher

Fertilizer prices have risen to a record high in North America, threatening to boost food inflation even higher. Nitrogen products are increasing due to the cost of natural gas, which is used in the manufacturing process.

The Green Markets North America Fertilizer Price Index soared to a record high last week of $996.32 per short ton.

The fertilizer market has been roiled by hurricanes, plant shutdowns, sanctions, and shortages of natural gas in Europe and China, pushing nutrient prices sky-high, which will raise the cost of production for global farmers. Here are global fertilizer prices zooming higher:

Fertilizers play an essential role in crop development for producing enough food for the global economy. The soaring costs of nutrients plus rapid food inflation will have the most severe economic impacts on emerging market economies first because low-income folks allocate a more significant part of their incomes to purchasing food. This week, the Food and Agriculture Organization’s global food index hit a new decade high, driven by gains for cereals and vegetable oils.

Expensive fertilizer will push production costs higher for farmers worldwide, which will continue to increase food inflation.

Benefiting from rising fertilizer prices is CF Industries Holdings Inc., the world’s second-biggest fertilizer company.

Rabo: Global Supply Chains Simply Will Not Be Able To Cope With Even More Stimulus

October 8, 2021

Rabo: Global Supply Chains Simply Will Not Be Able To Cope With Even More Stimulus

The Story is the Story

Today is a US payrolls Friday. I have covered 277 of these releases. A handful were of any lasting interest, signalling something the market didn’t already know beforehand, and a few dozen more were higher/lower enough to get a few days of trading from. The expectation is 500K, which I remind everyone is way, waaay lower than the implied “1 million a month” that was promised at the start of the year. And that is all I feel I need to add, given there will be 279 to follow, and so on (and on). Meanwhile, ongoing stories vastly outweigh the significance of any data.

The US debt-ceiling can is being kicked to 3 December. Hurrah for cans and hurrah for kicking! None of the larger problems on fiscal stimulus are being addressed, however. Indeed, the latest news is that Senator Manchin is insisting $1.5trn is as high as he will go. However, there are also suggestions that this may not mean choosing between three key programs Progressives want, but would instead see the 10-year timeframe compacted. In other words, a smaller headline bill with all the inflationary demand-boosting effects up front for a few years (presumably into the next election cycle…). And against a backdrop of global and US supply chains that simply will not be able to cope. That’s a story we will keeping seeing all over.

Global food prices in September already leaped again according to the FAO. That might not be seen in certain locations which no longer allow the FAO website to be accessed. However, the global story is still there even if the data aren’t…

…click on the above link to read the rest of the article…

Food Stamp Increase Means Higher Food Prices For All

August 19, 2021

Food Stamp Increase Means Higher Food Prices For All

With the stock market banging out new record highs each day and so many jobs available, it is odd the Biden Administration feels the need to boost the Supplemental Nutrition Assistance Program, or SNAP by 25 percent. This constitutes the largest single increase in the program’s history. This significant and permanent increase in benefits will be available indefinitely to all 42 million SNAP beneficiaries.The increase is projected to cost taxpayers an additional $20 billion per year. It coincides with the end of a 15 percent boost in SNAP benefits that was ordered as a “pandemic protection measure.” Agriculture Secretary Tom Vilsack said the change means the U.S. “will do a better job of providing healthy food for low-income families.” It will move the amount of the average monthly per-person benefits for qualified recipients from $121 to $157. Never think for a moment this is all about feeding the poor, it is also about pumping up the GDP and profits of many big companies.

Unfortunately, whenever the government increases its role in any sector of the economy history shows it generally has a profound effect on the prices charged to consumers. For proof, we only need to look at healthcare costs and college tuition. In this case, we should expect the same thing to occur to food prices. What does the big increase in the SNAP program mean to consumers both on this program and the rest of us? It means we should expect a big jump in prices in supermarkets across America.

…click on the above link to read the rest of the article…

Grocery Prices Could Rise 10 to 14 Percent By October, Grocery Chain CEO Warns

July 22, 2021

Grocery Prices Could Rise 10 to 14 Percent By October, Grocery Chain CEO Warns

This warning offers a painful reminder of how price inflation hurts everyday Americans.

American families are already struggling amid mounting price inflation that’s eating away at their budgets, with higher costs for housing, vehicles, and more. Yet a top CEO is warning that the growing inflation problem facing Americans could get much worse in the coming months.

The latest June data already show price inflation at a 13-year high, with prices having risen 5.4 percent year-over-year. Proponents of the big-government policies driving much of this increase insist the uptick in prices is only temporary. But billionaire and grocery chain CEO John Catsimatidis just predicted that overall price inflation, for consumer goods generally, will hit a 6 percent annualized rate by October.

In an interview with Fox Business, the CEO warned that his industry is seeing skyrocketing costs on the supply chain side, and that businesses will have to raise prices for consumers as a result.

“Food prices are getting higher, and we expect even more increases by October,” Catsimatidis said. “You have to pass [those extra costs] on [to consumers] or you’re not doing your duty to God, your country, your employees, and your company.”

While we can’t know for certain, Catsimatidis said rising costs could mean an astounding 10 to 14 percent specific increase in grocery prices by October. That’s truly a shocking amount. But this warning offers more than insight into the grocery industry. It’s a painful reminder of how price inflation hurts everyday Americans.

When we hear terms like “Consumer Price Index” or “expansionary monetary policy,” the conversation surrounding inflation quickly becomes inaccessible for many people, whose eyes understandably glaze over amid discussion of the abstract-seeming phenomenon…

…click on the above link to read the rest of the article…

Ranchers Sell Off Cattle And Farmers Idle Hundreds Of Thousands Of Acres As America’s Drought Emergency Escalates

June 12, 2021

Ranchers Sell Off Cattle And Farmers Idle Hundreds Of Thousands Of Acres As America’s Drought Emergency Escalates

In my entire lifetime, this is the worst that drought conditions have ever been in the western half of the country. During the past 20 years, the amount of territory in the West considered to be suffering from exceptional drought has never gone higher than 11 percent until now. Today, that number is sitting at 27 percent. The term “mega-drought” is being thrown around a lot these days to describe what is happening, but this isn’t just a drought. This is a true national emergency, and it is really starting to affect our food supply.

Just look at what is happening up in North Dakota. The vast majority of the state is either in the worst level of drought or the second worst level of drought, and ranchers are auctioning off their cattle by the thousands…

“Normally this time of the year, we’re probably looking at 400-600 head and a lot of times would be every other week,” said former auctioneer Ron Torgerson.

On Sunday and Monday, more than 4,200 head of cattle were sold at Rugby Livestock and Auction.

Needless to say, ranchers in North Dakota don’t want to get rid of their cattle, but the drought has pushed prices for hay and corn so high that many of them simply have no choice.

One of those that has already been forced to sell a large number of cattle is rancher David Bohl…

As the drought continues, the price of hay and corn has gone way up. It’s more expensive for ranchers to try and supplement feed than it is to sell the cattle.

Bohl has already sold 200 of his head in the last month.

…click on the above link to read the rest of the article…

La Nina Turbocharges Drought In Brazil Putting World’s Coffee, Sugar, & Oranges At Risk

May 19, 2021

La Nina Turbocharges Drought In Brazil Putting World’s Coffee, Sugar, & Oranges At Risk

Global crop and food prices are skyrocketing to multi-year highs, and the culprit could be due to La Nina, a weather pattern characterized by the cooling of the equatorial Pacific and triggers atmospheric shifts that cause droughts in some regions of the world and wetter conditions in others. The prospect of a severe drought in the US has already be outlined in previous notes. Now it appears the worst drought in 20 years has struck agricultural rich Brazil.

Over the last month, Brazil has been faced with drought during its traditional rainy season.

“Soils are parched, and river levels are low in the nation’s Center-South region, a powerhouse of agricultural output. The drought is so severe that farmers are worried they’ll run out of the water reserves that help keep crops alive over the next several months, the country’s dry season,” said Bloomberg.

The cost of this year’s drought could severely impact coffee, sugar, and orange crop yields.

Coffee farmer Mauricio Pinheiro, 59, began irrigating his arabica-coffee crops in March, more than two months earlier than usual after his 131-acre farm received only half the rain it needed. He’s using so much water that his wells are running dry.

“My irrigation reservoir is drying up now — that usually happens in August,” said Pinheiro, who resides in Pedregulho in the Alta Mogiana region, in Sao Paulo state. “I’m concerned about running out of water in the coming months.”

One of the worst droughts to hit the country in decades is coming at a time when agricultural prices have rallied to multi-year highs, fanning fears of food inflation.

As much as the Federal Reserve is hoping for “transitory” inflation – La Nina altering weather patterns could exacerbate food inflation and make the problem global and last for years.

…click on the above link to read the rest of the article…

Social Unrest Fears Mount As World Food Prices Soar In April

May 7, 2021

Social Unrest Fears Mount As World Food Prices Soar In April

Global inflation is headed into overdrive as the leading food price indicator that is the United Nations’ Food and Agriculture Organization’s food price index increased for an 11th consecutive month in April, hitting levels not seen since May 2014, with sugar prices leading the rise in the main index.

The Rome-based FAO released data Thursday showing the food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat, and sugar, surged 2 points from 118.9 points in March to 120.9 in April.

That is a 30.7% YoY jump – the fastest rise since 2011…

The April surge was primarily led by price increases of sugar, oils, meat, dairy, and cereals.

FAO’s cereal price index moved up 1.2% in April M/M and 26% Y/Y. Drought conditions in Argentina, Brazil, and the US increased corn prices by 5.7% last month, while wheat prices were flat. Global rice prices slipped last month.

FAO’s vegetable oil price index rose 1.8% last month because of increasing soy, rapeseed, and palm oil prices, which offset lower sunflower oil prices.

Milk prices increased 1.2%, with surging demand from Asia, while the meat index rose 1.7%. FAO said there was “solid demand” for bovine and ovine meat in East Asia.

The idiots at the Marriner Eccles building seemingly have no interest in reading the extensive literature in connecting higher food prices to periods of social unrest. Indeed, you’ll notice from the chart below that the last big surge from the middle of 2010 to early 2011 coincided with the start of the Arab Spring, for which food inflation is regarded as a contributing factor.

While this is hardly new – we discussed it in “Why Albert Edwards Is Starting To Panic About Soaring Food Prices” and in “We Are Edging Closer To A Biblical Commodity Price Increase Scenario.”

…click on the above link to read the rest of the article…

Investors Do Not See “Transitory” Inflation

May 4, 2021

Investors Do Not See “Transitory” Inflation

The Federal Reserve and European Central Bank repeat that the recent inflationary spike is “transitory”. The problem is that investors do not buy it.

Inflation is always a monetary phenomenon, and this time is not different. What central banks call transitory effects, and the impact of supply chains are not the real drivers of inflationary pressures. No one can deny certain supply shock impacts, but the correlation and extent of the increase in prices of agricultural and industrial commodities to five-year highs as well as the abrupt rise of non-replicable goods and services to decade-highs have monetary policy to blame. Injecting trillions of liquidity makes more funds chase fewer goods and the rise in the real inflation perceived by citizens is much larger than the official CPI.

Take food prices. The United Nations Food Price Index is up 30% in the past five years and up 10% year-to-date (April 2021). The rise in food prices already caused protests all over the world in 2018 and it continues to reach new highs. The correlation in the price increase of most agricultural goods also shows that it is a monetary effect.

The same can be said about the Bloomberg Commodity Index which is also at five-year highs and up 15% year-to-date.

Yes, there have been some supply disruptions in a few commodities, but it is not widespread let alone the norm. If anything can be said is that the rise in agricultural and industrial commodities is happening despite the persistent overcapacity that many of these had already before the pandemic. We should also remember that one of the unintended consequences of massive monetary expansion is perpetuation of overcapacity. Excess capacity is refinanced and maintained even in crisis times…

…click on the above link to read the rest of the article…

Why Global Inflation Is About To Go Into Overdrive

April 27, 2021

Why Global Inflation Is About To Go Into Overdrive

If you think inflation is already blistering hot – as most companies and survey respondents clearly do – and the worst case been largely priced in, with little inflationary upside left, think again.

As Bloomberg notes, last week saw the Bloomberg Agriculture Spot Index rise by the most in almost nine years, to extend the stellar rally seen since last August.

Due to the lag between ag costs and finished food prices, the latter are about to soar. And since food is a large component of CPI baskets in Asia, Bloomberg warns that “this large inflationary impulse in the region that houses more than half the world’s population should result in higher wage costs in the factory base of the world. As CPI and PPI rise in Asia, it will feed through globally in the months ahead.”

Think “Arab Spring” (which sparked a domino effect of revolutions in North Africa and the Middle East due to soaring food prices) only in Asia this time… and on steroids. And then read what Albert Edwards wrote in December when he explained why he is “Starting To Panic About Soaring Food Prices.”

On The Verge Of A Global Crisis: One Bank Warns Of A “Biblical” Surge In Food Prices

March 19, 2021

On The Verge Of A Global Crisis: One Bank Warns Of A “Biblical” Surge In Food Prices

Biblical, Lean, and Mean: ‘Dreams’ of an agri-commodity super-cycle

Then Pharaoh said to Joseph: “Behold, in my dream I stood on the bank of the river. Suddenly seven cows came up out of the river, fine looking and fat; and they fed in the meadow. Then behold, seven other cows came up after them, poor and very ugly and gaunt, such ugliness as I have never seen in all the land of Egypt. And the gaunt and ugly cows ate up the first seven, the fat cows. When they had eaten them up, no one would have known that they had eaten them, for they were just as ugly as at the beginning. So I awoke.”

– Genesis 41:17-21

Summary

Key feed and food prices have been pulled to 9-month and 7-year highs
We explore the ‘dream’ of Biblical scarcity; its origins and impacts; and draw comparisons with Joseph, the trader and central planner who avoided starvation for ancient Egypt
One point is clear: global food insecurity falls heaviest on lower income, importing nations, who spend a far greater share of their income on food than the richer ones
The Fed would play an ironic role in this process even as it embraces fighting poverty and inequality alongside inflation
This could exacerbate (geo)political risk – potentially even regarding institutional architecture

Our Base Commodity Call

At time of writing, our forecasts for three of the world’s key agri commodities, soybeans, corn, and wheat are as follows:

The First Big Commodity Call

In the Bible, Joseph interpreted Pharaoh’s dream as meaning great abundance for seven years would be followed by an equal famine. He was then entrusted with ensuring Egypt’s storehouses were full of grain so the country could survive – which he, and it, did.

…click on the above link to read the rest of the article…

This Potentially Catastrophic Inflation Surge Slipped Under the Radar (Until Now)

January 30, 2021

This Potentially Catastrophic Inflation Surge Slipped Under the Radar (Until Now)

FAO Food Price Index hits a three-year high in 2020, following additional gains in December

The FAO Food Price Index (FFPI) averaged 107.5 points in December 2020, up 2.3 points (2.2 percent) from November, marking the seventh month of consecutive increase.

You’ve read about housing market bubbles, stock bubbles, and even credit bubbles. But the next bubble you’re about to discover could be even more dangerous, and may have even more far-reaching consequences.

It’s called a food price bubble, and it’s been inflating under our noses since March 2020. You can also see the dangerous trajectory it’s on compared to three previous years in the FAO chart.

The official January 7, 2021 release from the Food and Agriculture Organization explains the chart above in more detail.

And according to a Business Insider piece, grain has risen in price 50% over the last six months while other commodities like industrial metals are starting to drop in price.

In fact, according to an official source, food price inflation has risen each month by at least 3.5% (year over year) since April 2020 both at home and away from home.

And December didn’t show any signs of that trend letting up, with a price increase of 3.9% over December 2019. Keep in mind, we’re talking about food here. Technically this price surge isn’t a bubble ‑ it’s inflation.

This is exactly what we expect to see when the Fed’s loose-money policies support bubbles in the housing, stock and credit markets. An excess of currency chasing a fixed supply of paper assets inflates prices, which isn’t a big problem as long as the feeding frenzy stays contained in the paper asset markets. So long as amateur day-traders stick to playing stock-market roulette with the likes of Tesla and GameStop, the day-to-day world can go about business as usual.

…click on the above link to read the rest of the article…

Food Prices Around the World Soar, But Inflation Remains…Incredibly Low?

January 20, 2021

Food Prices Around the World Soar, But Inflation Remains…Incredibly Low?

Food price indexes over the past rolling 12-months have been reported increasing at a healthy 4% clip, but US government and banking officials have still been reported 12-month rolling “official” inflation rates in the US at a comical and lowly 1.4%. To refresh our memories, this is what happened with soaring food prices in 2010. Paul Risley, the United Nations World Food Program’s spokesman in Asia, reported that some of the 28 million “poorest of the poor” it fed could go hungry because the agency couldn’t afford to buy many of the world’s staple grains. In 2010, corn, the staple food of Central America and Mexico, also soared in price, and the US Department of Agriculture, revised its forecast for the US corn crop yield downwards by 12.6 million tonnes, or 3.9%, to 321.7 million tonnes. According to CBH Group’s wheat trading manager, Chris Brown, the USDA’s revision at that time was the largest monthly revision for corn crop supplies ever at that time. “Never before has the USDA moved the corn yield down by such an amount,” Mr. Brown said. Prices remained elevated for food in 2010 and in the years ahead but then plummeted back to normalcy in around 2013.

Fast forward to 2021 and food prices are starting to soar again. Within the past year, my patrons know that I advocated the purchase of the soybean ETF: SOYB back in August of 2020 when soybeans were still selling at about $8.50 a bushel to take advantage of coming soaring soybean prices, the reasons for which I had built the case for several months prior. Since then, in six months, soybean prices have soared to over $14 a bushel, and my suggested purchase back then of the Teucrium Soybean Fund (NYSE: SOYB) has soared more than 50% in price…

…click on the above link to read the rest of the article…

EU Polices on Farming will Create a Famine

November 2, 2020

EU Polices on Farming will Create a Famine

The EU is indeed playing into our model which has been projecting this would be a commodity wave built on food shortages. They will indeed contribute to worldwide famine and they have been supported by Bill Gates which seems to actually play into his desire to reduce world population. Food prices will rise and the poor will be left starving. This will contribute to the rising civil unrest much as the food shortages led to the French Revolution.

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