First we had the oil price crisis which some people think is caused by speculators, but in reality is caused by the fact that the speculators have formed a belief that there is limited supply and increased demand. Hence market forces will set prices higher and higher until there is no further tolerance for higher price.
Now we have the news that the wild card of the Iowa floods is having greater impact on the local farmers than we might have expected. Check out this story.....(From Moneyweek)
"A catastrophe for Iowa farmers will not be just a catastrophe for Midwestern Americans. In the Iowa floods, we’ll see more evidence of how the problems of weird weather (climate change) combine and ramify the problems associated with Peak Oil. In this particular case they lead to an inflection point sometime around the 2008 harvest season, which will also be our time of political harvest.
These are not your daddy’s or granddaddy’s floods. These are 500-year floods, events not seen before non-Indian people started living out on that stretch of the North American prairie. The vast majority of homeowners in Eastern Iowa did not have flood insurance because the likelihood of being affected above the 500-year-line was so miniscule — their insurance agents actually advised them against getting it."
It seems that not only has the move into corn/ethanol reduced the availability of food, but now with the increased price of delivery via trucks and the reduced amount of recompense that farmers will receive via insurance that there are significant stresses on the whole agribusiness/infrastructure ecosystem.Expect that the speculators will get onto this next and drive up futures in all food products in the US and that will impact prices in other countries too.
