News comes that Americans are hoarding food. The big discount stores are apparently rationing rice, for example.
“Sam’s Clubs, Costco limit bulk rice purchases,” said an AP story last week.
Today, the New York Times talks of a “recession diet,” in which shoppers try to switch to cheaper foods. And there is talk of a drought this year, further reducing the supply of available grains.
“We’ve reached the peak for grain production,” says Resource Trader Alert ‘s Kevin Kerr.
“World farmland planted with grain has declined since 1980, mostly due to environmental factors such as soil erosion, waterlogging and salting of irrigated land, air pollution and water shortages.”
“We are also running out of crop varieties and have ridden fertilizer as far as it will take us. Thus, world grain output has been holding flat at around 1.6 billion tons and may begin to fall.”
The LA Times mentions consumers “coping with soaring prices.” And the Boston Globe reports that drivers are trading in their gas-guzzling SUVs in favor of smaller cars. Maybe that is why Toyota is now the world’s leading automaker – selling more vehicles than General Motors.
Gasoline is at about $3.60 a gallon. Milk is even higher, at more than $4 a gallon. Consumers have no choice – they have to cut back. That, too, is one of the essential verities of today’s economy. Ours is a consumer economy in which consumers have less money to spend.
“In short, we’re facing a crunch in just about every natural resource you can name,” Kevin tells us. “But for investors, the indicators for real asset investments are flashing green. My expectation is that we are at the beginning of a major bull market in commodities. That will mean an unending trend of higher prices for the things that keep the world running.
“So the cycle of ups and downs will continue. But now there is a floor – a level commodity prices simply cannot fall below. And the emerging economies – and the booming population – push that floor a little higher each day. It will just take awhile before the market is ready to admit it.
“Until that happens, we can play those ups and downs for tremendous opportunities. And while we’re not the only ones who’ve noticed, we do have one advantage over most investors…”
Markets and Money