Food Crisis Stocks 2011

Brian Hicks

Updated May 19, 2011

There is no recovery. Nothing has improved. Growth for the last quarter came in at an explosive 1.8%.

The rising cost of living is outrageous, as food and energy prices rocket on the Fed’s reckless disregard for money.

And government spending is out of control — even after we broke through the $14 trillion debt ceiling.

Housing has double dipped.

Jobs are still being lost; we’re not creating enough jobs for all the kids entering the workforce, let alone re-filling the six million jobs lost over the last few years.

And the floor is being pulled out from under stocks.

There’s a lot to worry about these days… the economy, our debt limit, deficits, the Middle East — you name it.

But just when you thought things couldn’t get any worse, food prices are about to rocket higher in coming weeks — even higher than what we called for last November.

You see, thanks to what’s being referred to as a “500-year flood”, the areas surrounding the Ohio and Mississippi Rivers could be looking at millions of dollars’ worth of farmland damage, as both rivers flood simultaneously.

And corn prices could skyrocket even more as a result…

corn chart 2011

Attempts by farmers to frantically plant more may not be enough to help this year’s output.

It’ll still take weeks before the flood waters recede. And by that time, it could be too late to stop corn prices from inflating — especially as 10 freight terminals along the Mississippi see their operations suspended… as 15 miles of the Mississippi were just closed off… and as rising waters have inundated three million acres of farmland.

All we can do is sit back and watch food prices soar, both across the United States and the globe.

Higher Food Prices are Here to Stay

Even before the flooding, the World Agricultural Supply and Demand estimates from the USDA were calling for big increases in grain costs from the 2010-2011 year to 2011-2012.

Wheat prices were expected to run to $6.80 to $8.20 a bushel, as compared to $5.65. Corn prices were projected to be $5.50-6.50 per bushel compared to $5.10-5.40 per bushel. And on and on.

Plus, here’s an interesting take on higher food costs — one that hasn’t really made big rounds in the press…

It seems the CEO of Smithfield Foods has some concerns going forward:

We’ve had the luxury for the last three years of extremely good corn crops, with high yields and good growing conditions. We are just one bad weather event away from potentially $10 corn, which once again is another 50% increase in the input cost to our live production.

The largest chicken processor in the United States, Pilgrim’s Pride, filed for bankruptcy… [ They] couldn’t raise prices, so their cost of production went up dramatically.

When asked if this could happen, the same CEO exclaimed, “It darn well could!”

Here’s the guy in charge of a global food company telling us food prices are going higher and will stay higher; that food companies will go bankrupt, and that lower supplies will hit.

And if you haven’t caught on yet, let me spell it out for you: The consumer gets screwed in the end here.

We’re descending into a food crisis that’ll ravage the world as we know it. Food prices will not come down. We should prepare ourselves now to see food shortages.

Some of the companies that stand to prosper as nutrients are washed away by the floods are Mosaic (NYSE: MOS), Agrium Inc. (NYSE: AGU), and CF Industries Holdings (CF). And the Market Vectors Agribusiness ETF (MOO) and Teucrium Corn Fund (CORN), brought to my attention by Wealth Daily‘s Adam Lass, are buys here.

Inflation Nation

While the rest of the country suffers from inflation and the increasing cost to put food on the table, there are ways to protect your family — and your investments.

My colleague and fellow editor Luke Burgess has spent the past several months and a small fortune researching the Fed’s Quantitative Easing decisions — the effects of which are rapidly deteriorating our nation’s stability each day — to show as many people he can reach out to the simple steps he has personally taken to ensure that when the dust settles, your financial situation won’t be in ruin…

Don’t waste another second. Find out how to protect yourself in the face of inflation.

Stay safe out there,

Ian L. Cooper
Editor, Wealth Daily

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