• 746 days Will The ECB Continue To Hike Rates?
  • 746 days Forbes: Aramco Remains Largest Company In The Middle East
  • 748 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,148 days Could Crypto Overtake Traditional Investment?
  • 1,152 days Americans Still Quitting Jobs At Record Pace
  • 1,154 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,157 days Is The Dollar Too Strong?
  • 1,158 days Big Tech Disappoints Investors on Earnings Calls
  • 1,159 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,160 days China Is Quietly Trying To Distance Itself From Russia
  • 1,161 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,164 days Crypto Investors Won Big In 2021
  • 1,165 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,165 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,168 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,168 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,171 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,172 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,172 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,174 days Are NFTs About To Take Over Gaming?
Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

  1. Home
  2. Markets
  3. Other

Agri-Food Thoughts

The term "bubble" is thrown around a lot. It is especially used by analysts that do not understand why the price of something is rising. If an analyst failed to forecast the rising price, it must be a bubble. Maybe yes, maybe no. Bubbles have three characteristics. Importantly, bubbles are built on (1)a widely accepted consensus forecast of (2)rising price (3)financed by debt. Such would aptly describe the global housing bubble which has burst. It would also be an apt description of developments in the paper oil market. Only in part does it explain the price developments in Agri-Food. While paper commodity prices have no doubt benefited from margin financed speculators, fundamental changes are also in play. Those changes are not being recognized in the analytical community because they persist in maintaining a "factory mentality." Market strategists continue to await a supply response in Agri-Food. However, as this week's chart shows, the size of the Agri-Food "factory" is shrinking.

As the chart shows, the acreage of U.S. farm land is shrinking. Same is true for China, and much of the rest of the world. Higher Agri-Food prices may dampen the negative slope of the trend. But, the longer term degradation of global farm land is not being reversed. Whatever supply response that might occur will in part be thwarted by the shrinking "farm factory." Revenues going to the Agri-Food sector must rise sufficiently to maintain the size of the Agri-Food "factory." Hopes for another Green Revolution abound. However, the only Green Revolution likely in the next decade is the avalanche of green paper($s) descending on the global Agri-Food sector. Will your portfolio benefit from the current Green$ Revolution?

AGRI-FOOD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of Agri-Food Value View, a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To review a recent issue, write to agrifoodvalueview@earthlink.net.

 

Back to homepage

Leave a comment

Leave a comment