Category: Economy

Amber Waves Of Pain: How Bad Is The Food Shortage Crisis Going To Get?

As I sit here, studying my screen as it scrolls through the various commodities I either trade or simply follow out of professional curiosity, I find myself once again staring at a sea of green –  meaning the markets are positive for the day. Cash corn, for example, is trading at $7.97 per bushel. This is a run-up of 63% since January 2021. Cash wheat is trading $10.63 per bushel, up 73% since January 2021. Soybeans are up 43%. And so on. This is just in 18 months. The rise in commodities prices, especially food and energy, has been epic since their nadir during the Covid lockdowns went into full force around April 2020.

These flashing digits on my screen represent not just data points but very real and deep pain for hundreds of millions around the world. At least those without the wherewithal to leverage access to an important father to ink million-dollar “consulting” deals with Ukrainian oligarchs or Chinese despots, or the ability to enact market-moving laws while making personal insider stock trades so presciently timed they’d make Jesse Livermore salivate. Indeed, every uptick I see tells me someone on a fixed income or desperately trying to hang on to middle-class status, let alone half the world’s population who earn less than $10,000 per year, faces a crisis not seen since the advent of the postmodern age. And now we are starting to hear a frightening phrase bantered about not just in the media but also in the halls of power: food shortages.

In May, while speaking to the Treasury Select Committee, Bank of England Governor Andrew Bailey said: “The [risk] I’m going to sound rather apocalyptic about, I guess, is food…It is not just a major worry for this country; it is a major worry for the developing world.”

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Many Wheat Crops Are Failing

Russia’s war in Ukraine has disrupted global food supplies, driving up demand and prices for wheat. But after months of drought, many western Kansas farmers won’t have a crop to sell.

LANE COUNTY, Kan. (Kansas News Service) — This time of year, the wheat growing in this part of western Kansas should be thigh-high and lush green.

But as a months-long drought continues to parch the region, many fields tell a different story.

“There’s nothing out there. It’s dead,” farmer Vance Ehmke said, surveying a wheat field near his land in Lane County. “It’s just ankle-high straw.”

Across western Kansas, many fields planted with wheat months ago now look like barren wastelands. The gaping spaces between rows of brown, shriveled plants reveal hardened dirt that’s scarred with deep cracks from baking in the sun.

Of all the years for drought to hit western Kansas wheat farmers, it couldn’t have come at a worse time.

Even with wheat selling for near-record-high prices as the war in Ukraine disrupts the world’s food supplies, a lot of farmers in western Kansas won’t have any to sell. And those who made it through the drought with enough crop to harvest will likely end up with far fewer bushels than they had last year, a downturn that limits the state’s ability to help ease the global food crisis.

A dead wheat field with cracking dirt
Projections estimate that more than one of every ten wheat fields in Kansas will be abandoned this season due to the drought.

Wheat prices have bounced between $10 and $12 per bushel since setting an all-time record north of $13 in March. So it might stand to reason that farmers should be able to make up for poor harvests by selling the wheat they do have for more money.

But it’s not that simple.

The US Department of Agriculture estimates that wheat fields statewide will average roughly 39 bushels per acre this year, down sharply from 52 bushels per acre last year. But many farms in the western half of the state will produce far less than that.

USDA projections for Lane County say wheat farmers here will end up harvesting an average of 27 bushels per acre — less than half of what the county’s farmers averaged last year.

Ehmke considers himself fortunate. He expects his wheat to end up higher than that 27 bushel average, something he credits to the way he lets his land rest between plantings. But even with conservative land management strategies, his fields might still only produce half of what they did last year — all because of too much heat and not enough rain.

And he figures that at least half the wheat fields in western Kansas won’t produce enough for farmers to break even.

“They’re losing money,” Ehmke said, “even with the highest price of wheat that we’ve probably ever seen in the past 50 or 100 years.”

Part of the problem is an increase in costs. Farmers face higher expenses across the board this season, largely thanks to supply chain issues caused by the war in Ukraine and sanctions against Russia.

The price of diesel — the fuel required to run the tractors and trucks that keep farms going — reached an all-time high last month and remains more than $5.50 per gallon.

Nitrogen fertilizer prices also soared to record levels this spring, peaking above $1,500 per ton — more than twice what it cost one year ago.

“It’ll be a very difficult year,” Rejeana Gvillo with Farmers Business Network said. “Just because commodity prices are high, it does not mean that producers are better off.”

She said the differences between wheat stands in eastern and central Kansas — areas that should still see a decent harvest this year — and western Kansas were stark.

“Shorter crop. Uglier fields,” Gvillo said. “As we drove west, it just got way worse.”

A map of the Kansas wheat tour
This map of stops from the Kansas wheat tour shows that northwest and southwest Kansas have the state’s poorest crop conditions.

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These days, such doesn’t sound so crazy

Rep. Markwayne Mullin: Biden Administration ‘Trying to Wreck Our Economy’ for a ‘Socialist Takeover

Rep. Markwayne Mullen (R-OK) said the Biden administration is deliberately harming the U.S. economy to create pretexts for further governmental seizures of power and control over society, offering his remarks on Wednesday’s edition of SiriusXM’s Breitbart News Daily with special guest host Jerome Hudson.

Inflation of gas prices due to government decrees and policies is part of a broader undermining of U.S. prosperity driven by the Democrat Party to create citizens’ dependency on the state, Mullen stated.

“There are three things that a socialist takeover has to control,” Mullen said. “They have to control the education system, the healthcare system, and the energy sector. The energy sector, because the energy sector is the backbone of every economy. Without strong and affordable energy, you can’t have a strong economy. If you show me a country that doesn’t have reliable and affordable energy, I’ll show you a third-world country, and that’s the advantage that a socialist dictator [uses]. They take advantage of that.”

He continued, “They’re not disguising what they’re trying to do. They’re trying to wreck our economy so that the government can come back in and try to raise it back up. … They’ve literally taken the mask off. … They’re trying to destroy the market [for fossil fuels], and that market disruption happens to be in red states.”

Question asked:

Headline, the Financial Times, January 19th, 2021.

What does a Biden presidency mean for the world?

Question answered:

Headline, the Financial Times, yesterday.

An age of real wealth destruction.

We’re at the sort of inflection that only strikes once or twice a century. That’s what makes it tricky.

Most people alive today grew up alongside a simply historic rise in financial wealth. We know nothing but relentless asset appreciation, propelled by disinflation and falling rates. Liquidity outpaced the economy. So did asset prices. But violent financial and geopolitical regime change is upending that status quo and the bubbly valuations that hinge on it.

Disinflationary, liquidity-dependent assets are of course the opposite of what you want under opposite macro conditions. But after 40 years of hyperfinancialisation and the recent orgy of money-funded speculation, these assets are most of global market capitalisation.

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The article points out that 3/4s of our stuff is transported via truck vs. rail (also diesel powered which my search shows about a 1/3rd of the locomotives also use this) but it seems there’s some underhanded business dealing going on behind the scenes as well as econut BS.
The supply situation looks to get even worse than speculated.

Get ready for the catastrophic DEF shortage.

DEF is the acronym for Diesel Exhaust Fluid. Every diesel truck that has been made since 2010 is required to use it. It’s a product made of 32.5% urea (made from natural gas) and 37.5% de-ionized water. DEF is kept in a separate tank in the truck and the trucks using it will not start unless the DEF system is working properly. There are regulators inside the engine that mix DEF with the diesel exhaust to reduce diesel emissions. That’s the purpose of DEF.

Vehicles with SCR [Selective Catalytic Reduction] technology have a separate tank filled with DEF. This is then injected into the exhaust pipe, in front of the SCR catalyst, downstream of the engine.

Heated in the exhaust, it decomposes into ammonia and CO₂. When the NOx from the engine exhaust reacts inside the catalyst with the ammonia, the harmful NOx molecules in the exhaust are converted to harmless nitrogen and water, which are released from the tail pipe as steam.  (link)

The DEF system is critical for “greening” the use of diesel fuel. But DEF stocks are dropping.

The shortages our country is experiencing are making their way to diesel fuel and Diesel Exhaust Fluid (DEF).  If the current shortages of mechanics, trucks, and drivers does not improve then shortages may continue to get worse, so plan ahead.  … The bottom line is that freight won’t move without DEF.

Urea is manufactured as a derivative of natural gas. The largest US manufacturer is CF Industries, which has an overwhelmingly majority share of total manufacture:

Urea is also an essential ingredient in fertilizer. Yet despite these production numbers, the United States is the world’s third-largest importer of urea. Who exports it? Market Realist reports,

There’s a global shortage of urea. While the ongoing supply chain issues are also to blame for the urea shortage, the situation got worse after Russia invaded Ukraine. Russia is a major fertilizer exporter and the country has banned fertilizer and urea exports.

China, which is also among the major urea exporters, has put restrictions on exports. Urea prices have surged over the last year, which is leading to high fertilizer prices. To ensure the domestic supply of fertilizers at a time when there are real risks of a global fuel shortage, countries have been looking to curb exports and prioritize domestic consumption. Natural gas is the key raw material in urea production.

Since urea is a key input for DEF, the shortage is having a negative impact on the DEF supply. Also, Europe, which is among the major DEF exporters to the U.S., is battling higher prices and natural gas shortages.

And, key point:

According to Discover DEF, “If the truck is allowed to run out of DEF, the engine’s power is reduced, a solid red warning will be displayed and the vehicle speed will be limited to 5 mph until the DEF tank is refilled.” If the DEF shortage gets worse, it could ground commercial fleets since they mainly run on diesel.

So: US urea imports are falling, US DEF imports are falling. And US domestic manufacture of DEF is likewise falling and may very quickly turn critical. But what about consumer sales? How will that be affected? Let’s connect some dots.

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The prevailing urban attitude is:
“What do those dumb country hicks know about anything important?”

Rash wolf policy already wrecking ranches.

Don Gittleson’s ranch is situated just south of the Wyoming line near Walden. The ranch itself is surrounded by hills, and there are no big city lights to take your eyes off what matters. This is big country, this is ranch country, and Gittleson has been here for years. He has used good purebred genetics to build a herd of high-performing cattle that can, as they say, go out and make a living. Unfortunately, Gittleson’s ranch is also the epicenter for the wolf mess in which the state is currently elbow deep.

At night, the cow herd lies together, calves at side, gestating, lactating and ruminating, turning stout native grass and feed into beef. The only sound disrupting the soft noises of the night is the idling of Gittleson’s pickup.

Since December, he has spent an excessive number of nights in his pickup, waiting to hear the cattle or burros signal the presence of wolves. The pack, which Colorado Parks & Wildlife estimates at about eight, naturally migrated from Wyoming. Gittleson said he’s seen tracks for a number of years quietly announcing the presence of the apex predators.

Last fall, a collared female began teaching her pups to hunt. They started with deer and elk, killing groups and leaving them where they dropped in the snow. In December, Gittleson lost the first heifers to the pack. Some were killed, others were found bleeding and too severely injured to survive. The most recent kill — a calf — was partially dragged away. Gittleson said he guesses the meat was taken to the female, likely in a den with a new litter of pups. If history repeats itself, those pups will begin learning to eat beef before the new year.

Range riders are present overnight but it’s an expense he won’t be able to continue indefinitely. Right now, they’re on the dime of wolf-advocate groups but he doesn’t expect that to last and with five of the six damage claims unpaid and $5 diesel fuel, it doesn’t pencil. The most recent kill, he said, was while range riders were in the area. The wild burros that were gifted to Gittleson in the hopes that they would serve as guardians are, he said, able to noisily signal danger but certainly don’t fight off wolves.

The bottom line, he said, is that non-lethal hazing methods are ineffective if the wolves don’t have a fear of the use of lethal methods. The wolf pack is emboldened and unafraid. Without lethal methods, the next generation will learn to kill livestock and on and on until there is a large number of problem wolves across a large area. All of this, of course, playing out prior to the first released wolf ever hitting the ground.

The misguided ballot initiative, one that left the hands of actual experts tied, flung wide open the door to out-of-state activist groups and their cash. The state-level protection of wolves has taken more tools out of the management toolbox. It has become, and will continue to be, urban and suburban voters drowning out the votes of the rural areas that actually have to deal with the fallout.

While all of this is happening at Gittleson’s ranch, the CPW Commission is hearing and reviewing the Technical Working Group’s proposed management plan. The TWG, one of two groups along with the Stakeholder Working Group, wants to see the state take a phased approach to wolf introduction, eventually de-listing them, and, clutch your pearls, classifying them as either game or non-game species. The potential of bringing the wolf numbers to a level at which they are no longer fragile and may be managed by lethal methods outraged wolf advocates at the meeting.

The other realization that was brought forth during the meeting is an explanation of the territory each pack occupies. With the proposed 200 wolf population in the state, the wolves would occupy about 10% of the western slope. That means, one expert pointed out, it is more than entirely likely that the wolves will migrate into the Front Range and eastern Colorado. I can only imagine the Front Range voters who approved the measure questioning why the wolves aren’t kept on the other side of the state and not in their backyards.

With CPW required to move forward with wolf introduction, there is no ability for wildlife experts to make decisions based on what is best for wolves in real time but, it appears, that was never part of the equation.

The Biden Admin Said Gas Would Be $2.88 This Year.

At the end of 2021, the Biden administration released its energy outlook forecast for 2022, and their predictions show just how little they understand about American energy and how utterly unprepared they were for the energy crisis Biden was creating.

The U.S. Energy Information Administration — under the Department of Energy led by Secretary Jennifer Granholm — releases “short-term energy outlook” reports each month to provide information on liquid fuels and forecast their future trends. Their report issued December 7, 2021 — archived here — notes that the forecast “remains subject to heightened levels of uncertainty related to the ongoing recovery from the COVID-19 pandemic” but proceeded to estimate that “U.S. GDP will grow by 5.5% in 2021 and by 4.4% in 2022.”

And here’s what the Biden administration predicted for gasoline in 2022, just six months ago:

U.S. regular gasoline retail prices averaged $3.39 per gallon (gal) in November, a 10 cents/gal increase from October and $1.29/gal higher than in November 2020. The November monthly average was the highest since September 2014. We forecast that retail gasoline prices will average $3.13/gal in December before falling to $3.01/gal in January and $2.88/gal on average in 2022.

By January 1, gas prices were already $3.286 per gallon — breaking the Energy Department estimate from the start — and they increased to $3.386 per gallon by January 31. Prices have only continued to rise since then, more than doubling from their level when Biden took office and surpassing the $5 mark to reach $5.014 as of Monday. But the Biden administration thought and released its absurd projection that gas prices this year would average just $2.88.

In subsequent short-term energy outlooks, even as gas prices continued so soar, the Energy Department continued to keep its head buried in the sand and pretend prices would go and stay low.

In January, they said “gasoline prices will average $3.06/gal in 2022 and $2.81/gal in 2023.”

In April, they predicted “U.S. prices for retail gasoline will average $3.84 per gallon (gal) this summer (April–September).
>Whether they really thought in December that gas prices would drop in 2022 and remain below $3 on average or not, the official position and repeated low estimates from the Biden administration shows how and why they have been unable and/or unwilling to address the issue. It’s a crisis they — apparently officially — didn’t see coming. They’ve been, per their own estimates, behind the ball every step of the way as Biden’s inflation and energy crises spiraled out of control. And what has the Biden administration done? Secretary Granholm’s reaction here says it all:

Well, when there isn’t one……….

White House Economist Can’t Explain Biden’s ‘Plan’ on Inflation

Friday morning brought catastrophic results showing inflation yet again at a forty year high. It was even bad enough to blow past expectations. Predictably, President Joe Biden’s response involved blaming Russian President Vladimir Putin. White House Economist Cecilia Rouse tried to repeat that bogus excuse that same day, but not even CNN’s Jim Sciutto would let her get away with it.

Shortly after the numbers were release, Rouse appeared on “CNN Newsroom” where Sciutto directly asked her “does the White House see any relief in these numbers for Americans in the near future, and if so, when?”Through her fumbled response, Rouse failed to give a proper response. “So, look, the president very much understands and we very much understand that that we’ve got uncomfortably high inflation. What we saw in the data this month was that month on month prices increased overall, the headline CPI increased about 1 percent, and about half of that was due to food and energy, which can be almost directly tied to Putin’s invasion of Ukraine.”

Rouse looked to continue by saying “and so” before Sciutto cut in. “It’s not just that, you know,” he said, as sounding less than patient with this administration’s tactic to blame everyone else. “It’s not–prices are rising, I get it. I get the world oil markets are up, but you know pricing are rising for everything: used cars, rent.”

Faced with Scuitto’s pushback, Rouse had no choice but to concede to his point. “Absolutely. And so, and the president understands that and so he has, like, he has emphasized he’s focused on this as part of his plan, I know this doesn’t sound like a plan, but first and foremost he respects the independence of the federal reserve.”

In other words, it’s the federal reserve’s problem.

This is a tactic the Biden administration has used multiple times before, with President Biden himself also blaming Putin multiple times before for rising costs, especially with gas prices. The White House even tried to get #PutinsPriceHike to trend.

CNN is also not the only normally friendly outlet to go after Biden for his response when it comes to inflation.

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Democrat Senator Brags About How Gas Prices Don’t Affect Her

During Tuesday’s Senate Finance Committee hearing to discuss “The President’s Fiscal Year 2023 Budget,” Sen. Debbie Stabenow (D-MI) displayed just how tone-deaf she is on gas prices affecting her constituents when she bragged about driving an electric car. When it comes to the price at the pump, Sen. Stabenow said, “It didn’t matter how high [the price] was.”

“After waiting a long time to finally have enough chips in this country to finally get my electric vehicle, I got it and drove it from Michigan to here this last weekend and went by every single gas station, and it didn’t matter how high it was,” Sen. Stabenow said about gas prices. “And so I’m looking forward to the opportunity for us to move to vehicles that aren’t going to be dependent on the whims of the oil companies and the international markets,” she continued.

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