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World Has Just ’10 Weeks’ of Wheat Supplies Left in Storage, Analyst Warns

World Has Just ’10 Weeks’ of Wheat Supplies Left in Storage, Analyst Warns

The world has only about 10 weeks of wheat supplies left in storage amid the conflict in Ukraine and as India has moved to bar exports of wheat in recent weeks, a food insecurity expert says.

Sara Menker, the CEO of agriculture analytics firm Gro Intelligence, told the United Nations Security Council on May 19 that the Russia–Ukraine war “simply added fuel to a fire that was long burning,” saying that it is not the primary cause of the wheat shortage. Ukraine and Russia both produce close to about a third of the world’s wheat.

“I want to start by explicitly saying that the Russia–Ukraine war did not start the food security crisis. It simply added fuel to a fire that was long burning. A crisis we detected tremors from long before the COVID 19 pandemic exposed the fragility of our supply chains,” Menker said, according to a transcript.

“I share this because we believe it’s important for you all to understand that even if the war were to end tomorrow, our food security problem isn’t going away anytime soon without concerted action.”

In providing data, Menker said that due to price increases in major crops this year, it’s made another 400 million worldwide “food insecure,” adding that with wheat, the world “currently only [has] 10 weeks of global consumption sitting in inventory around the world.

“Conditions today are worse than those experienced in 2007 and 2008,” she said. “It is important to note that the lowest grain inventory levels the world has ever seen are now occurring while access to fertilizers is highly constrained, and drought in wheat-growing regions around the world is the most extreme it’s been in over 20 years…

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

Plunge of Retail Inventories, Collapse of New & Used Vehicle Inventories: The Shortages Depicted in Charts

Plunge of Retail Inventories, Collapse of New & Used Vehicle Inventories: The Shortages Depicted in Charts

Inventories at retailers document this mess. 

Turns out, when the US government spends $5 trillion in borrowed fiscal stimulus over 16 months, and the Fed hands out $4 trillion in monetary stimulus over the same period, causing asset prices to boom, demand for goods is going to wash over the land in tsunami-like waves, and supply chains that snake all over the world, amid finely honed just-in-time-inventory strategies, get tangled up. And as retail sales spiked in a historic manner, shortages of all kinds have been cropping up, including the semiconductor shortage that has slammed the auto industry with a vengeance.

Inventories at retailers document this mess. Inventories are tight all around, but they’re in catastrophic condition at auto dealers, which before the pandemic accounted for over one-third of total retail inventories.

Inventories at new vehicle dealers, used vehicle dealers, and parts dealers fell to $153 billion in May, down 36% from May 2019, according to data released by the Census Bureau on Friday. And the inventory-sales ratio – with inventories and sales both in dollars, the impact of inflation gets canceled out – dropped to 1.14, the lowest level in the data going back to 1992:

The inventory-sales ratio (inventories divided by sales) is a standard metric in the retail industry. A ratio of 1 means that the retailer has enough goods in inventory for one month of sales at the current rate of sales. This would be 30 days’ supply. A ratio of 2 – meaning 60 days’ supply – is considered healthy in the auto industry.

In dollar terms: The ever-more expensive vehicles in inventory over the years explain all of the long-term rise of inventories in the chart below. Unit retail sales – and unit inventories with them…

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

Inflation Jumped by 3.8% in Q1, “Real GDP” Rose 1.6%, Dragged Down by Record Trade Deficit and Drop in Inventories

Inflation Jumped by 3.8% in Q1, “Real GDP” Rose 1.6%, Dragged Down by Record Trade Deficit and Drop in Inventories

Even the Fed’s repressed inflation measure without food and energy rose 2.3% annual rate in Q1.

The US economy, as measured by inflation-adjusted GDP, grew by 1.6% in the first quarter from Q4 2020, according to the advance estimate of the Bureau of Economic Analysis this morning.

If you read in the headline that it grew by “6.4%,” that sounded impressive, but it was “annualized”; it essentially multiplied the quarterly growth rate (1.6%) by 4. There are not many countries outside the US, if any, that report “annualized” GDP growth rates, because they’re really just misleading for normal people.

GDP inflation jumped by 3.8%, PCE inflation by 3.5%.

The BEA’s broadest inflation measure, the price index that roughly parallels the inflation adjustment to GDP (the “price index for gross domestic purchases”), jumped by 3.8% annual rate in Q1, more than double the rate of 1.7% in Q4.

The BEA’s narrower PCE (“personal consumption expenditure”) price index jumped by 3.5% annual rate in Q1.

And the BEA’s price index that has become the Fed’s measure for inflation, “core PCE” (PCE without food and energy) rose by 2.3% annual rate, tracking above the Fed’s former target of 2.0%. “Former target” because now the Fed is looking for inflation above 2%.

GDP in dollars.

In dollar terms, real GDP in Q1 amounted to a “seasonally adjusted annual rate” of $19.09 trillion. This was still down about 0.9% from the peak in Q4 2019 – catching up:

Consumer spending rose 2.6% from the prior quarter, to an annual rate of $13.3 trillion in “chained 2012 dollars” (to adjust for inflation), a tad below the peak in Q4 2019.

This jump was powered by the $600 stimmies that went out in late December and the first waves of the $1,400 stimmies that went out in the latter part of March. In Q1, consumer spending accounted for 69.7% of GDP:

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

GDP: Fake News

GDP: Fake News

GDP: Fake News

The first-quarter GDP number was released this morning. And at 3.2%, it came in far above estimates. Consensus was about 2.3%. It was also the highest Q1 GDP print since 2015.

But there’s probably less here than meets the eye.

About half the GDP gain came from a surge in inventories and a sharp reduction in the trade deficit, neither of which is sustainable. They are likely one-time boosts.

The economy has been growing since June 2009, making this the second-longest economic expansion on record. However, it has also been the weakest economic expansion on record. That has not changed under President Trump.

Even during Obama’s weak expansion we saw strong quarters including the first quarter of 2015, which was 3.2%, and the second quarter of 2015, which was almost 3%. The problem is that these strong quarters soon faded; growth in the fourth quarter of 2015 was only 0.5%, almost recession level.

Under Trump, second-quarter 2018 growth was a very impressive 4.2% annualized. Third-quarter 2018 growth was 3.4%. Trump’s tax cuts seemed to be producing exactly the kind of 3–4% sustained trend growth Trump had promised.

But then the economy put on the brakes and growth slowed to only 2.2% in the fourth quarter. It looked like the 2018 “Trump bump” in growth was over and growth was returning to the 2.2% trend that had prevailed during the Obama administration.

And despite the first quarter’s 3.2% outlier, I expect lower GDP in the quarters ahead, returning to the same punk levels we’ve seen for nine years.

For the year, economists believe GDP will expand 2.4%, down from last year’s 2.9% gain, as the boost from the 2017 tax cuts and increased government spending over the past two years start to fade.

What about the possibility of recession?

Most investors are familiar with the conventional definition of an economic recession. It’s defined as two consecutive quarters of declining GDP combined with rising unemployment and a few other technical factors.

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

What Is The Government Preparing For?

What Is The Government Preparing For?

UN Vehicle - Jeff SternYou may not be getting prepared for a major national disaster, but the government sure is.  I have been informed that in recent months numerous emergency food companies have been contacted by the government, and they have been told that their inventories could potentially be seized in the event of a significant emergency.  And as you will see below, the government recently participated in an exercise that simulated “an unprecedented global food crisis lasting as long as a decade”.  In addition, NPR has just revealed details about the very secretive Strategic National Stockpile program that is storing billions of dollars worth of medical supplies in warehouses around the nation.  This is a program that most Americans do not even know exists.  On top of everything else, strange reports of military vehicles with UN markings have been coming in from all over the nation.  So what in the world is the government up to?  Why are they working so feverishly hard to get prepared?

Let’s begin our discussion with the Strategic National Stockpile.  According to NPR, there are at least six of these warehouses at various locations around the country, and they are holding at least seven billion dollars worth of supplies…

Thousands of lives might someday depend on this stockpile, which holds all kinds of medical supplies that the officials would need in the wake of a terrorist attack with a chemical, biological or nuclear weapon.

The location of these warehouses is secret. How many there are is secret. (Although a former government official recently said at a public meeting that there are six.) And exactly what’s in them is secret.

“If everybody knows exactly what we have, then you know exactly what you can do to us that we can’t fix,” says Burel. “And we just don’t want that to happen.”

What he will reveal is how much the stockpile is worth: “We currently value the inventory at a little over $7 billion.

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

“It’s Probably Nothing”: Truck Orders Plunge 37% As Unsold Inventories Soar Most Since 2007

“It’s Probably Nothing”: Truck Orders Plunge 37% As Unsold Inventories Soar Most Since 2007

When we last looked at order of heavy, or Class 8, truck one quarter ago – that all-important, forward looking barometer of domestic trade – we said that even with 2015 in the history books, and as we start 2016 where the base effect was supposed to make the annual comps far more palatable, the latest, January data, as abysmal: “the drop continues to be one of Great Recession proportions, manifesting in yet another massive 48% collapse in truck orders in the first month of the year as demand appears to have gone in a state of deep hibernation.”

Fast forward one quarter when we now have another three months of Class 8 truck data, and unfortunately the orderbook has gone from bad to worse. As the WSJ reportsorders for new big rigs plunged and inventories of unsold trucks soared to their highest levels since just before the financial crisis, as uncertainty about future demand and a weak market for freight transportation weighed on truck manufacturers.

About 67,000 Class 8 trucks are sitting unsold on dealer lots, after sales in March dropped 37% from a year earlier to 16,000 vehicles, according to ACT Research. Class 8 trucks are the type most commonly used on long-haul routes. Inventories haven’t been this high since early 2007, said Kenny Vieth, president of ACT.

The number of March orders was the lowest since 2012.

The problem according to the WSJ? Simply not enough freight, or as some may call it, trade: “It boils down to, at present, there are too many trucks chasing too little freight,” Mr. Vieth said.

As the Journal adds, companies that placed large orders in late 2014, only for customers to move less freight than expected last year, are reluctant to buy more vehicles now, analysts said.

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

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