Inflation: global food blowout 2011

It begins: similar to 2008 when inflation spiked on food and oil.

from WSJ 25/01/2011

"Fast-growing emerging nations are taking increasingly aggressive actions to beat back rising food prices as they grow more worried of threats to stability if prices don't start to retreat.

Developing-market governments have unveiled a laundry list of measures—including price caps, export bans and rules to counter commodity speculation—to keep food costs from disrupting their economies as price spikes that some had hoped were temporary have stretched into the new year. Some economists worry that any further supply shocks could push prices even higher, triggering a food-price crisis like the one the world witnessed in 2008, when higher food costs led to violent unrest across the developing world.

Workers handle rice sacks in Jakarta. Rice prices remain below highs in 2008, when higher food costs caused unrest across the developing world.

In the latest indication of concern, Indonesia said Thursday it will remove import tariffs on more than 50 items including wheat, soybeans, fertilizer and animal feed in an effort to slow the rise in food prices. Indonesia is also planning to raise taxes on palm-oil exports to 25% from 20% next month, according to a government official familiar with the matter.

Bad weather, more-affluent populations and underinvestment in agriculture have pushed up prices of everything from wheat, rice and onions in India, chilies in Indonesia and water spinach in China. Some point to low interest rates in the U.S., Japan and Europe, as investors use cheap financing to invest in globally traded commodities such as rice, sugar, cotton and oil, driving their prices higher. Soy bean prices in the past six months have risen 46% to more than $14 a bushel at the Chicago Board of Trade. Sugar, while lower than in November, is still up 34% over six months ago to around 31 cents a pound in IntercontinentalExchange trading.

In response to the price pressures, India earlier this month extended bans on exporting lentils and cooking oil. It also struck a deal with archrival Pakistan to import 1,000 tons of onions, a key cooking ingredient whose price has skyrocketed after floods.

China and several countries in the Middle East have instituted or strengthened ongoing price controls. South Korea has lowered import tariffs on some foods. Indonesia has been encouraging its citizens to plant chilies to boost supply."

Rule: small series of coincidences usually lead to an event or disaster

• 10yr spike, rumored 'fat figure' trade

• TIC data showed China showing less interest in US Treasury holdings

• Portugal denied rumors of a canceled auction 20/01/2011 and confirmed talks with Abu Dhabi.

• Spain's savings banks could meet loan losses, will try and tap Asia for more money

• inflation driven 'food riots' spreading from the Tunisia to rest of Africa, Egypt, Middle East

• extreme weather events: floods southern hemisphere

Australian floods: food shortages for flood victims, nation will see food inflation spike

"The death toll of this week's devastating floods stands at 15, with 55 people still missing.

Last night, “Ann from Moggill” detailed on ABC Radio her family’s harrowing experience running low on food.

With three adults and five children in their family home, having given refuge to another family of flood evacuees, Ann's husband went to the nearby Moggill State School emergency centre to ask for milk.

The distressed mother told ABC he had been given one cupful, and told he had to "drink it on the spot". Requests to take it home to his family were denied.

This morning, Andrew Solomon, the operations manager of another nearby evacuation centre at Moggill Uniting Church, said strict rationing procedures were still in place.

He said while the first of two military Unimog vehicles arrived with provisions at 11pm last night, at that time there were already 100 people at the centre in need of food, and he expected many more to return this morning.

Mr Solomon said that while meals would be served at the centre, there were not yet enough supplies to hand out bread and milk."

The Age 14/01/2011