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Wakum Mata!
Politcally Incorrect Musings
Will work for food 
28th-May-2008 12:23 pm
food
I was reading my financial news and discovered that the Subprime Contagion has mutated and spread to the Russian bond market.

More reading on bonds showed similar lethargy in the US market:

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Treasuries Fall on Durable Goods, Tepid Two-Year Note Demand

By Daniel Kruger

May 28 (Bloomberg) -- Treasuries fell, pushing the 10-year note's yield above 4 percent for the first time since January, as a measure of durable goods orders unexpectedly rose and the government's two-year note sale was met with tepid demand.

Bonds extended their losses after the auction of $30 billion of the securities drew a higher yield than bond trading firms forecast and the lowest level of demand since February from a group that includes central banks. The government will sell $19 billion of five-year notes tomorrow.

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But reading deeper, the above article further stated:

Dow Chemical Co., the largest U.S. chemical maker, said it will raise prices on all of its products by as much as 20 percent because of surging costs for energy, raw materials and transportation.


Lets review some of what Dow Chemical (NYSE: DOW) makes:

ethylenamines: they are fungicides that are used to prevent and kill things like rusts and blights. Currently, there is a new strain of black stem rust called Ug99 that is devastating wheat crops in northern Africa and the Middle East.

herbicides: Dow makes a portfolio of them with several designed to improve the yield of rice in Southern US and California.

Oil and gas mining products: Chelating agents prevent mineral buildup in the boreholes, well drilling lubricants, and various solvents and catalysts.

Interesting... Note the feedback loop? Oil is required to produce the products required to produce oil. One goes up, then the other must, too, causing the other's price to go up. And thus happens for several iterations until a new stability point is met.

Food is expensive because the US has almost no refining capacity left and depends on foreign oil and minerals. We need to tell the Leftists and eco-terrorists to get bent and open up more areas for mineral exploration and refining.

I am hearing tales that grocery stores on the the southern US border are starting to run out of staples like bags of Rice. Mexico must be getting hungry.

Your take away is this: food is going to get MUCH more expensive VERY QUICKLY.
Comments 
2nd-Jun-2008 03:46 pm (UTC) - Local granary
I was at a local Asian grocery store this weekend.

Rice is not an issue here. Not in the least. What kind of rice? What size bag? You want a palette of rice?

Yeah... perhaps it is not a matter of hunger on the border, but a mundane matter of economics - distribution.
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