Friday, September 28, 2007

Hey! The price of grain went up!

Of course, as it's a global market and the dollar is shrinking, this is expected. What's surprising to me* is that the WSJ mentions the housing bubble, but only to say it's also hurting the economy, not that it wiped out great swaths of farmland.

* -- in the "I find it surprising you failed to take your muddy shoes off before walking across the carpet" sense

3 comments:

Nephos said...

But isn't the price of grain going up everywhere in the world?

I thought it was something like 10 calories fossil fuels per one calorie food stuff (or thereabouts), so really it's more a reflection of the rising price of energy, no?

Rionn Fears Malechem said...

Clearly the dollar didn't drop 41 % in the last year, so doesn't explain the 70 % rise of Kansas Wheat itself. I'm inclined to believe the article's thesis that we hit an infection point, and went from grain abundance to grain scarcity.
Worrisome is the comment that US Farmers will have a bumper crop this year -- I tend to think that's a climate change effect, and will vary quite a bit year to year. But, if next year is not also a bumper crop, the prices will be much higher.
Just to muddy the argument, and really return to the main thesis of my original post, is that the 'bumper crop' probably applies to land under continuous cultivation, and not our overall total. The housing bubble removed land under cultivation. For reasons I don't really understand, Italy and Mexico have had housing bubbles to go along with ours, and are now deflating. As China grows quickly, you might suspect that it's removing land from cultivation near cities, but I don't really know anything about that -- according to the article it's trying to bring its meat production up with imported grain.

Nephos said...

Yes, and 'bumper crop' does not necessarily translate into greater availability of foodstuffs at lower prices. I'd be surprised if the land gobbling was significant. Urbanization tends to reflect greater wealth potential, and hence greater capacity to buy any increased prices in grains (though it still sucks for them rural folk). Nonetheless, I have heard that today's bumpers crops are being increasingly used to feed cars rather than people. My prognostication: this is very natural, and is representative of a continuation of a centuries long trend towards increased mechanization of civizilization, with accompanying decreased fertility. Why have kids when its so much more fun to facilitate future energy consumption through the use of of other economic vehicles of support and entertainment?