Another post based around one day of scattered reporting at the Wall Street Journal’s hard copy addition. I put the page number at the end of the tag line to show how scattered these reports are. The Egyptian article particularly had a lot of interesting back and forth on the politics of wheat shipments, but was buried at the bottom of the page. For those not familiar, the “A” section tends to be political, world and opinion. The “B” section is marketplace news. “C” is commodities, and “D” is personal (soft) news. But they had no relevant articles that I noted.
We did something similar a couple of days ago for general economic trends, and sure enough the markets did not miss the implications and dropped the next day. These reports here a little more mundane, with the implications being a bit more diffused. You have, for obvious reasons, the decline in the Dollar and Euro, which leads the Japanese to make noises about taking measures to weaken their own currency: The ongoing race to the bottom.
But with commodities, food in particular, showing continuing both inflationary and supply problems, you are looking at something that has a much more Malthusian feel to it. I have mentioned this number of time previously, but Jack Goldstone noted that in the period prior to the industrial revolution (the early modern period), even with very solid precious metal based currencies, arable land and food showed inflationary pressures with the rise in population. Today you would the major food input of oil as well.
Neena Rai, Wall Street Journal, 4 August 2011, A6.
Heavy rains have left as much as 60% of Ukraine's wheat exports unfit for human consumption, providing a boon to the animal-feed sector but threatening to push up food prices in countries like Egypt...
The rains started in July, wetting the winter wheat as it was harvested and causing the quality to deteriorate. As a result, Ukrainian agricultural analysis body APK-Inform expects nearly five million metric tons of wheat will be exported for use as livestock feed. Last year, Ukraine exported 1.68 million tons of wheat as livestock feed.
Ukraine won't run out of wheat for domestic consumption; the biggest impact of the damage will be on its exports to the rest of the world, and in particular Egypt, which is its biggest customer.
James T. Areddy, Wall Street Journal, 4 August 2011, A11
SHANGHAI—Edible-oil producers said Wednesday Chinese authorities for the first time this year have sanctioned a rise in the retail prices they charge, a sign that after months of tough price controls Beijing is letting some inflation effects be felt in households.
Prices on supermarket shelves for cooking oil are jumping 5%, major producers said. "Yes, we are raising prices of our cooking oil in China by about 5%," Lim Li Chuen, a spokeswoman for the largest producer of edible oil in China, Singapore-based Wilmar International Ltd., said by email...
Cooking oil is another particularly important commodity for price-sensitive Chinese households, more commonly used even than rice and bottles of it are considered an appropriate gift.
Chasing the Commodity Boom [changed from: “Chasing the Commodity Tigers” in the print version?]
Eric Bellman, Wall Street Journal, 4 August 2011, B1.
JAKARTA, Indonesia—High food and commodity prices have hobbled poor consumers and triggered riots in emerging markets this year. But in commodity-driven economies like Indonesia, the rising prices are lifting millions of farmers and miners out of poverty—and creating opportunities for global companies
The trend is causing companies to change how they price, produce and promote their products, reaching further outside of the companies' traditional strongholds... Honda now bases its Indonesia sales projections in part on prices for products such as palm oil and cocoa...
Of course, many of Asia's poorest people are hurt by food inflation if they aren't involved in commodities-related businesses. The Asian Development Bank projects that 64 million people in Asia could be pushed below the poverty line as food prices take a bigger bite. In Indonesia, food and fuel subsidies have helped offset some of the pain.
Annie Gasparro, Wall Street Journal, 4 August 2011, B4.
Despite its growth ambitions, Dunkin' Brands isn't immune to the economic hurdles facing the industry. Coffee and ice-cream prices are much higher than last year, squeezing franchisees' restaurant margins and forcing them to raise prices on some menu items.
"We now expect coffee prices to be flat in the third quarter, which we are very encouraged by," Mr. Travis said...But higher commodities costs at Baskin-Robbins remain a concern.