That food prices are benefitting from some kind of huge demand macro-cycle, coupled somehow with cheap liquidity, seems to be pretty well ingrained ensconced in conventional wisdom.
And there’s probably something to that.
But any food bull seriously has to factor in the extent to which weather is playing a part in the current run-up (and did so during the 2007-2009 boom, as well).
The Telegraph has a good rundown of current La Niña-inflected weather from around the world. There’s flooding in Australia, drought in the US, unseasonable weather in South East Asia, heavy rainfall in Brazil, etc.
Presuming this is a cyclical phenomenon — and not, say, the END TIMES, or the new normal due to global warming — then this will abate, and the forces currently pushing up hard and soft commodities will abate, even if the end demand and economics remains the same.
When you consider this, alongside events like Cargill dropping its stake in Mosaic, considering the possibility that we’re nearing some kind of top seems worthwhile.
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