Food Inflation set to rise – Grain prices set higher records as U.S. drought, food worries spread:
Grain prices pushed to record highs on Thursday may trigger higher Food Inflation as scattered rains in U.S. Midwest did little to douse fears that the worst drought in half a century will not end soon or relieve worries around the world about higher food prices. Government forecasters did not rule out that the drought in the U.S. heartland could last past October, continuing what has been the hottest half-year on record.
“There’s a greater chance that there is no relief possible or in sight” for the U.S. Midwest, Dan Collins of the National Oceanic and Atmospheric Administration’s Climate Prediction Center said on Thursday. More than 70% of the Midwest Corn Belt was in some stage of drought in the week ended July 17, up from 63% a week earlier. It adds up to the worst drought conditions in theUnited Statessince at least 1956. That is bad news for farmers and consumers, with corn, soybeans and wheat in theUnited States– the largest world exporter of those key crops — baking in fields, losing yield potential daily or being plowed under for insurance claims. The currently seen Low Food Inflation levels may soon be set on fire.
Corn for September delivery at the Chicago Board of Trade set a record high of $8.16-3/4 a bushel, while soybeans for August delivery also set a record high of $17.49. Wheat for September rose 4% at $9.35 and set a four-year high. The knock-on effect of Food Inflation with such soaring prices was already being felt around the world, where drought has also hit other grain exporters who are starting to cancel previous sales and leave hungry countries in the Middle Eastand elsewhere scrambling. Conditions & Food Inflation will worsen as corn was failing to pollinate and soybeans, planted later, face their key growth stage in stress. This has been one of the toughest years of farming as corn crop was “finished” because it never pollinated.
Around the world, last month was the fourth-warmest June, NOAA experts said. Temperatures on land were the warmest ever recorded, while ocean temperatures were the 10th warmest. The Northern Hemisphere had its second-warmest June on record.
But worst hit are likely to be dairy, pork, poultry and beef farmers, who are seeing their feed costs go through the roof and already taking action to reduce their herd sizes. Consumers may not see immediate major rise in Food Inflation, but it is surely coming, and in a BIG way!
Farmers may be giving up on their crops earlier rather than trying to save them due to insurance coverage’s.
Anecdotal evidence and economic assumptions suggest that a record number of farmers are likely preparing to file insurance claims this year, opting to plow under their withered crops — some without bothering to administer the costly pesticides and weed killers that might help salvage a dwindling harvest. Call it “moral hazard” in the heartland: with the growing use of federally backed crop insurance, a shift toward larger policies and newer schemes that protect revenue, some experts say farmers may now be better off claiming a total loss than eking out a shrunken harvest — a move that could exacerbate a 50% surge in corn prices by further reducing supply.
“Why spend money trying to save a crop when every bushel of crop you save is then going to reduce the indemnity that you would otherwise receive?” said Vince Smith, an economist at Montana State University who has been critical of the program. Indemnified losses are likely to significantly exceed last year’s record $10.7 billion, experts say, a sum that will be shared by the government programs that subsidize the dozen or so specialist crop insurance firms that sell the policies. Consumers across the world will also pay at the grocery store: as more farmers give up, the corn crop shrinks; propelling food prices even further beyond last year’s $8 a bushel.
Policies require farmers to notify insurance companies of crop damage within 15 days, adjustors say. But it can be difficult to know when the damage begins in situations like a drought, where stalks wilt a little bit more with every day.
Posted earlier: Inflation rises through a fresh upside wave in commodity prices, food prices, services and wages are definitely around the corner. The rises may initially be seen as economic growth but the naked reality may soon be realized.
Often repeated & alerted since the start of 2012: Putting food on the table will be a more pressing concern than buying luxuries or gifts. Inflation & scarcity of food will be severely felt.
Now being proven Right: I have repeatedly alerted since the mid of 2011 that, Taxes will be ruthlessly imposed with a view to alleviate the financial & social disasters of the time leading to the further lowering of living standards, a lot of homeless people and huge areas of vacant real estate. The impositions of more and more taxes will finally trigger large & violent revolutions. There will also be large waves of crimes triggered by the hard times.
Hundreds of thousands of Spain’s dejected populace marched against the centre-right government’s latest severe Austerity Measures on Thursday evening, following more than a week of demonstrations across the country.
Demonstrators took to the streets in towns and cities across Spain, thronging the thoroughfares of Madrid and Barcelona, waving flags and bearing banners decorated with scissors to symbolize spending cuts. In Madrid, crowds of firemen wearing helmets and t-shirts with the slogan “Firemen in danger of extinction” blew horns and let off firecrackers. Earlier, policemen and members of the Civil Guard joined the protests.
Ever since Prime Minister Mariano Rajoy announced spending cuts and tax rises last week there have been daily demonstrations drawing protests from public service workers like police that have previously stayed away. Civil servants, whose pay was cut by up to 7% when their Christmas bonus was cancelled, have used their coffee breaks this week to protest outside the ruling People’s Party (PP) headquarters inMadrid.
“We have to make some noise, because they’re making fun of us and of all working people,” said Iria, 34, an auditor in the treasury, during a rally outside the PP building on Wednesday.
Unemployment is on the rise as many small & medium sized enterprises have shut shop. Some yet holding on to their businesses have been forced to cut salaries in the sliding economy. Survival seems bleak for even the most brave at the moment.
Public workers up to now had accepted several cuts or freezes in their salaries over the last three years with a sense of resignation. But the latest round of belt-tightening has spurred widespread anger. “It has gone beyond an ideological issue … and it’s moved beyond the traditional groups that demonstrate. We have seen even the military threatening a demonstration,” said Ramon Pacheco, a lecturer in Spanish politics at Kings College London.
Rajoy announced the cuts as thousands of miners and supporters, some of whom had marched hundreds of kilometers (miles) from northern Spain to protest against a reduction in coal subsidies, staged a rally that ended with police firing rubber bullets and making arrests. Civil servants poured out of their offices to block Madrid’s main arteries following Rajoy’s announcement and have protested every day since, organizing action through emails and by coordinating at work without any clear leaders.
One message doing the rounds urges citizens to gather in the main squares of their cities on July 27 and says: “The Spanish people are sick of all politicians. Let’s make history!”
The cabinet on Thursday approved a parliamentary motion categorizing “urban violence” as a specific crime, which could empower police to detain suspects preventively before being charged with the offence.Source: Reuters
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