So Brazil dominates feed exports... and my numbers shows that margins for pig farmers are negative at the moment, so if they limit exports its going to be meat that becomes a problem.
US could raise exports a bit - and maybe argentina..
Hi Russell, thanks for the update. I understand your reasoning that where food prices go wages go, but does that have to be an immediate correlation? Couldn't one argue that 1) in the US and the EU where growth is slowing workers lack the bargaining power right now to get wage increases (as far as I'm aware real incomes are still falling) and 2) given declining M2 in US and the EU, the additional money that would have to go toward food if prices spike would come from other pockets, e.g. discretionary spending? And if that's the case, a spike in food prices (or commodities more broadly) would actually squeeze the economy even more in the short to medium term (i.e. until CBs start easing again and the monetary base goes back to expansion mode) and increase the risk of recession? Isn't that what happened to some extent in 2007-08?
That Chinese Current Account surplus (ATH) won't help domestic pricing in Brazil (other EMs) either, as China starts another pro-cyclical wave of commodity purchases.
Wrote a little article on China in my Substack if interested. (not a plugging/spamming with a link). Hope you're feeling better.
Great presentation, Russell! This agrees very well with my own thinking/observations. Food is key and current situation is pretty precarious - we have not even come to deal with consequences of reduced fertiliser use after a spike last year and yet it seems markets are totally relaxed about food abundance.
Major issues with rice in China (floods and droughts decimated the last couple of crops) and pretty absurd short wheat position by speculators combine to create potential explosion upwards in these 2 key commodities. Ukraine grain stocks are depleted and new planting is much reduced. If there is substantial damage from winter kill in the US/Russia, situation can get pretty dire.
So Brazil dominates feed exports... and my numbers shows that margins for pig farmers are negative at the moment, so if they limit exports its going to be meat that becomes a problem.
US could raise exports a bit - and maybe argentina..
Hi Russell, thanks for the update. I understand your reasoning that where food prices go wages go, but does that have to be an immediate correlation? Couldn't one argue that 1) in the US and the EU where growth is slowing workers lack the bargaining power right now to get wage increases (as far as I'm aware real incomes are still falling) and 2) given declining M2 in US and the EU, the additional money that would have to go toward food if prices spike would come from other pockets, e.g. discretionary spending? And if that's the case, a spike in food prices (or commodities more broadly) would actually squeeze the economy even more in the short to medium term (i.e. until CBs start easing again and the monetary base goes back to expansion mode) and increase the risk of recession? Isn't that what happened to some extent in 2007-08?
If Brazil restrict exports, who is the swing exporter?
My guess is the US or Canada, which is a geopolitical problem for China.
There are no major China aligned exporters of oilseeds and coarse grains, that's China's dilemma.
That Chinese Current Account surplus (ATH) won't help domestic pricing in Brazil (other EMs) either, as China starts another pro-cyclical wave of commodity purchases.
Wrote a little article on China in my Substack if interested. (not a plugging/spamming with a link). Hope you're feeling better.
Great presentation, Russell! This agrees very well with my own thinking/observations. Food is key and current situation is pretty precarious - we have not even come to deal with consequences of reduced fertiliser use after a spike last year and yet it seems markets are totally relaxed about food abundance.
Major issues with rice in China (floods and droughts decimated the last couple of crops) and pretty absurd short wheat position by speculators combine to create potential explosion upwards in these 2 key commodities. Ukraine grain stocks are depleted and new planting is much reduced. If there is substantial damage from winter kill in the US/Russia, situation can get pretty dire.