Grain Stocks

[Fransisco]

http://www.resourceinvestor.com/MediaLib/Images/Home/Sections/SoftsGrains/World%20grain%20stocks.png


Yes, inflation is a factor (cotton) but lets not forget supply and demand in the whole equation. The supply just ain't what it used to be.

[Fransisco]

World Grain Stocks to Use: world grains are composed of wheat, coarse grains (Corn, sorghum, barley, oats, rye, millet and mixed grains and milled rice. It may provide a more complete picture of the all grains in general the world demand has access to use and various combinations of feed and food alternatives rather than an individual line item. Allendale's research finds present end stocks to use of total world grains at 16% which is at a record level low dating back to 1990. The previous low was 17% in 2006, with the record level high in 1998 and 1999 at 32%.

Alarming is despite high global prices as an incentive to increase total 2008/09 grain production to 2,509 million tonnes vs. 2,455 million tonnes, 2008/09 end stocks to use are expected to remain unchanged at 16%.

Even though there is expected to be an end stock increase of 3.39 million tonnes from 2007/08 to 2008/09, stocks to use remain historically tight. Please view our "Of Interest" page to view the total world stocks of grain. Dramatic is the slide from 1999 levels of 585 million end stocks has been occurring.

From 1999 to projected 2008 the end stock reduction has been 41%. Can the world continue to maintain such a steep slide ?

[cottonpicken]

Inflation causes the demand.

[cottonpicken]

And get use to the word quadrillion.

[boarderbloke]

cotton, doesn't inflation curb demand, i would suggest that "prosperity causes demand", and these days that's coming from China and India!

[bucket]

I saw on BNN this morning Iraq bought 102000 tonnes of US and Canadian wheat.

Countries are still buying, the demand is still there.

My question is - with ending stocks being so low even with this "bumper" crop, why are the prices in the toilet?

[furrowtickler]

Prices always slide this time of year if the market is comfortable there will be enough grains/oilseeds to go around.
IMO they will be scrambling in Feb 09, much the same as Feb 08. The markets do not feel any need to panic yet so they try to push the price down as far as they can going in to harvest. We need to be patient as farmers, things will spark up again.

[Fransisco]

I agree with boarderbloke. Inflation translates into higher prices, and higher prices eventually leads to less demand.

When people are more prosperous, their income levels are rising, they are more able to pay the higher prices. It therefore takes longer for demand rationing to kick in.

Rising prosperity, currency inflation, and low grain/food stocks. Now there is an explosive combination.

[Fransisco]

Here's one for you cotton on your favourite subject. Shades of things to come?

<b>Lack of bank note paper threatens Zimbabwe economy</b>

HARARE, ZIMBABWE -- It has come to this: Zimbabwe is about to run out of the paper to print money on.

Fidelity Printers & Refiners, the state-owned company that tirelessly churns out bank notes for the Robert Mugabe regime, was thrown into a crisis early this month after a German company stopped supplying bank note paper because of concerns over Zimbabwe's recent violent presidential election, widely seen as fraudulent by international observers.

The printing operation drastically slowed. Two-thirds of the 1,000-strong workforce was ordered to go on leave, and two of the three money-printing shifts were canceled.

The result on the streets was an immediate cash crunch.

"If you think this currency shortage is bad, wait two weeks. By then it will be a disaster," said a senior Fidelity staffer, who spoke to The Times on condition of anonymity because he would face dismissal and possible violence for talking to a Western journalist. The paper will run out in two weeks, he said.

Fidelity Printers is Mugabe's lifeline. It prints the money to pay the police, soldiers and intelligence organs that keep the regime in power. Lately, the money has been used to set up a network of command bases around the country staffed by liberation war veterans and youth militias, hired muscle to terrify the population into voting for Mugabe in the June 27 presidential runoff election.

If the regime can't pay the security forces on which it relies, it would face economic paralysis -- and potential collapse.

Zimbabwe's economic meltdown harks back to the collapse of its major export industry, commercial farming, after Mugabe's controversial land reform program early in the decade. That left the nation starved of foreign exchange, but government spending went on.

How did it do that? It printed money. But printing more and more money without an increase in productivity fueled rampant hyperinflation.

As hyperinflation spiraled last year, Fidelity printed million-dollar notes, then 5-million, 10-million, 25-million, 50-million. This year, it has been forced to print 100-million, 250-million and 500-million notes in rapid succession, all now practically worthless. The highest denomination is now 50 billion Zimbabwean dollars (worth a U.S. dollar on the street).

Despite the recent currency shortage, the Zimbabwean dollar has continued to slide against the U.S. dollar and shopkeepers are still increasing their prices steeply. The price of the state-owned Herald newspaper has leaped from 200,000 Zimbabwean dollars early this month to 25 billion now. Before the crunch, a beer at a bar in Harare, the capital, cost 15 billion Zimbabwean dollars. At 5 p.m. July 4, it cost 100 billion ($4 at the time) in the same bar.

An hour later, the price had gone up to 150 billion ($6).

Apart from the paper crisis, the real fear inside Fidelity is that its software license for the European bank note design technology that it uses could be withdrawn because of new sanctions threatened against the Mugabe regime, the staffer said. The design department is crucial: It must constantly conceive new notes as those on the streets are rendered worthless by hyperinflation.

"If that happened, that would be it," the staffer said.

The internal workings of Fidelity Printers have been one of the regime's best-kept secrets for years. But as the government looks increasingly tenuous, institutions that were once impossible to penetrate are starting to show cracks.

Fidelity may be the beating heart of the regime, but the staffer revealed an institution under severe pressure.

The place pulsates with sound and smells of ink. The printing machines are old and frequently break down, requiring spare parts from Germany, which will no longer arrive. Workers are unhappy about salaries and fear for their jobs because of the paper shortage.

"When the machines were operating 24 hours a day, there was so much pressure on the employees that they just could not take," he said. "You couldn't take time off. Even weekends, people had to come in.

"People are aware that printing money is also one of the causes of the inflation. But you know, it's a job. You've got to do it."

Now that the production has slowed, the pressure of working full time is replaced with the terror of being laid off, he said. The plant is planning to use paper from a local producer, but that manufacturer already has trouble meeting its orders for paper for checks.

As the currency shortage took hold on the streets this month, the capital's myriad currency dealers found it harder to make a profit.

Here's how the currency black market works: Dealers get local currency illegally through the back door of the reserve bank or from tellers who will provide cash in return for a payoff. They sell it at a profit to locals with foreign currency, gotten by trading in neighboring countries or through remittances from Zimbabwe's huge diaspora.

On the first floor of a building downtown, the black market currency-dealing offices attract some of the city's best and brightest young graduates.

One office looks like something out of a Chicago gangster movie. The boss, impeccably dressed, sits behind a desk. On his right, in a white cap and suit, sits one of the dealers. A Mugabe election poster is plastered on the wall. On a cabinet is a framed $10 note -- which generates as much nostalgia around here as a much-loved but extinct fluffy mammal.

"That was real money," cracks the boss.

Everyone laughs, though the joke is not funny.

Tendei, 34, one of the black market dealers, gave up a good job as sales manager of a large Western company in 2003 because the salary did not cover his commuting and other costs.

In recent weeks, until the German paper supply stopped, the government had accelerated its money printing, with fresh notes constantly seen on the streets.

"They were just printing money to pay all the militias," Tendei said. "Inflation is now out of control. Nobody can control it."

For most Zimbabweans, the economic crisis boils down to one thing: how to put food on the table. It's a difficult trick when you have no job, or if the bus fare costs more than your pay, and the prices in shops keep going up.

"Everyone is struggling to keep up with this mounting pressure, day by day," said John Robertson, an independent economist here. "It's a thing that gradually creeps up. Some people have already succumbed. Some factories have closed. More are likely to succumb as prices rise."

Another independent economist, Tony Hawkins, said Zimbabwe's economy was imploding so fast, some major factories were reporting that it would be a matter of weeks before they would be forced to shut down.

"The beer and Coke guys are saying they have only six to eight weeks before they will have to close," Hawkins said. "Some of the smaller banks are screaming. It's accelerating downhill. It's got its own momentum now. Just sit back and watch.

"Everything is imploding at the same time. You just get the sense that they can't hold on much longer."

Everyone at Fidelity Printers knows the money printing is propping up Mugabe, the staffer said. Despite the threat to their jobs, some secretly hope for breakdowns and paper shortages, he said.

"I'm happy about this crisis caused by the unavailability of paper," the staffer said. "Because maybe it might lead to a change of things in this country."

[Fransisco]

Here is a key quote "...printing more and more money without an increase in productivity fueled rampant hyperinflation."

We can get away with printing more money if it stays in line with our productivity. But that's a big if and in my opinion the guys in charge over here in the west don't necessarily have the discipline either.

[cottonpicken]

Fran and cotton starting to agree,whats the world coming to?

They cant not print now.
The rate is geometrical.
Not arimetrical.

Were all to blame.
Voters vote for the guy whos going to give them the most.

Those future liabilities get passed on to the next generation.

Those debts HAVE to be paid with cheap dollars,not expensive ones.

[parsley]

It's the newly hatched elite. They're mostly rotten.

The worst are derivatively driven; they hone in on process instead of policy. Their policy is not consistent. No reasonable. (ONE man in charge of derivitives, for example? Two people in charge of licensing? Good grief.)

They have no idea what policy will cause down the road, because they cannot see the big picture, mainly because they don't want to substitute insight for their self-serving blindness.

Look around you in agriculture...you can spot them.

Have you observed, for example, someone fly back and forth for years, sip the wine, attend the sessions, speaking for "you" but not listening to you,fostering exclusion, making sure nothing ever gets done, so they can continue with their expense accounts, not knowing how unimportant they really are in the scheme of things?


When you strain their thoughts which have simmered over hot air for years, farmers end up being served a portion that causes stomach ache.

Prompted by self-importance, the hatchlings continue to assume they are right. "One size fits all," they proclaim.

"I know what's good for you."

" I've super-planned this, trust me. "


And we eventually get to pay for the mess.

My appreciation for the days of tar and feathering is growing.

Parsley

[Fransisco]

I think we should be able to find something more modern than tar and feathers these days. How's about just a liberal sprinkling of canary seed dust?

[Fransisco]

Speaking about the world getting richer and from the its not just all about inflation file ...


Boom time for the global bourgeoisie
By Jim O’Neill

Published: July 15 2008 18:29 | Last updated: July 15 2008 18:29

In the midst of the current widespread gloom and doom in the west, it is important not to lose sight of the true structural themes shaping our era.

Linked to the current mood, commentators often depict an embattled and shrinking middle class, with sharply rising financial inequality. However, globally, this is simply not true. One of the most startlingly positive phenomena for many generations continues to unfold around the world. We are in the middle of an explosion of the world’s middle class.

As two of my colleagues, Dominic Wilson and Raluca Dragusanu, showed in a paper Goldman Sachs published last week (The Expanding Middle: The Exploding World Middle Class and Falling Global Inequality), about 70m people a year globally are entering this wealth group, as defined by those on incomes of between $6,000 and $30,000 (€3,800-€19,000, £3,900-£15,000), in purchasing power parity terms.

The phenomenon may continue for the next 20 years, with this global middle accelerating to 90m a year by 2030. If this happens, an astonishing 2bn people will have joined the ranks of the middle class. This demonstrates that, contrary to widespread opinion, global inequality is declining significantly, not increasing.

Behind this powerful development is, of course, the unfolding story of the Bric, as we dubbed Brazil, Russia, India and China back in 2001. In addition to the gloom surrounding cyclical challenges in the US and other developed economies, it is currently becoming fashionable to believe that the Bric story is about to be tipped over the edge by rising inflation, scarcity of resources and their own backlash against globalisation. Some slowing of rapid growth in these economies is bound to happen. Indeed, the sustainability of it might be helped by some softening.

But I believe this negative mood is overstated. In China, we are seeing evidence that inflation may have peaked three months ago. This week we are likely to hear consumer price inflation slowed to 7.1 per cent in June, the third consecutive monthly slowing, and we think annual inflation will be back below 4 per cent by early next year.

With this move, overall gross domestic product growth will slow below 10 per cent, but this decline will be led by exports and investment. The Chinese consumer is going to keep on spending. In fact, judging by the ongoing strength of retail sales, the Chinese shopper may already be spending more than his or her equivalent in the US.

In all our exciting 2050 projections, including those updated for the recent paper, we have assumed that Brazil, Russia, India and China all grow at notably slower rates than currently. The same is true for the other countries that make up the bulk of the exploding global middle.

The emergence of this group is led by China and India but, importantly, includes many other countries. Even without China and India, the expansion of the new middle classes would be about 20m a year. Middle-class citizens will appear in their millions in many other parts of Asia, central and eastern Europe, the Middle East and Latin America. This is a Bric-driven phenomenon, but the “next 11” are making their contribution and other nations will also participate.

Dramatic changes in economic, social and political trends will probably follow, some of which are already beginning to emerge. According to news stories last Friday, Russia has already become Europe’s biggest car market, outstripping Germany, following dramatic first-half sales. Automakers are fleeing from Detroit to Moscow and St Petersburg. Battles about the right way to run global businesses, countries and trading between us all will inevitably grow. Meetings of the Group of Eight leading economies will become redundant features of the annual calendar, with a new group driving the world’s economic agenda.

It is also evident that poverty is dropping dramatically around the world. According to our calculations, the number of people living on incomes of less than $1,000 dollars a year ($2.75 a day) has already dropped significantly from about 50 per cent of the world’s population in the 1970s to 17 per cent by 2000. According to our numbers, it could be as low as 6 per cent by 2015. On the more familiar World Bank definition of one dollar a day, the same dramatic shift is evident. Probably no more than 5 per cent of the world’s population now suffers this indignity. Of course, this is too much, but as long as the forces of globalisation continue we expect it to drop further.

It is important for everyone in the so-called developed world to be constantly aware that these powerful shifts in global wealth are good not only for the developing world, but for them too. If you take a look at a chart of recent US export growth, you may well think you are looking at the wrong data series. But you are not. US exports are indeed growing at close to 20 per cent and it is this that is stopping the housing and credit crunch from driving the US into a deep recession. Aspects of the same phenomenon can be seen in Japan, Germany and even the UK.

The new middle-class explosion is going to remain the market opportunity for us all, or certainly for those of us who are prepared to respond to the new realities.

The writer is chief economist at Goldman Sachs