Over at Minyanville, Sally Limantour put together a good article on the global food crisis.  Unfortunately, the billions of impoverished around the world will be the victims of central bank printing presses as many of them cannot afford the recent rising cost of staple foods.  It appears these central bankers have taken selfishness to the moon just so a few wealthy cronies can be bailed out.  Nevertheless, price inflation is making headlines around the world, which will provoke the minority elite to soon move their funds into the ultimate inflation hedge - precious metals. 

Furthermore, as noted in the article below, South Africa is already feeling the strain of electricity shortages so this additional food crisis could put its impoverished majority over the edge.  What makes South Africa stand out is that they are a major gold producer.  Any disruption to their gold production would cause a major spike in gold prices.

Those poor but wicked bankers - VHF

Uproar Over Food Inflation

Sally Limantour

April 3, 2008

Inflation concerns continue to mount. You can feel the civil unrest percolating and it looks as if full blown strikes and riots will become a norm.

Countries, such as, Mexico, Russia, South Africa and Yemen are all experiencing unrest as the very staples of life have become unaffordable.

Food prices in South Africa are now up 70% from a year ago. At the same time the rand is down 15%. And with the recent power outages, it looks as if electricity costs are set to explode, adding fuel to the fire. Some say electricity prices could increase as much as 50-60% in 2008-09. This would be a double whammy and will be sure to maintain inflation in the double figures.

Soaring export taxes on the crops in Argentina have lead to rebellious strikes by the farmers. As a consequence, produce and beef are missing from the shelves in the grocery store. Empty shelves make people angry.

The upshot of rising food prices is already being felt in China. Rice is a staple in China and most of Asia and prices have more than doubled. In fact, a quick glance at the Chicago Board of Trade rice chart shows rice prices making new high as I write (see below). Just in a week, rice prices are up another 11.5%.

Civil unrest is possible as people in China are eating more rice than is being produced. To counter the effects of higher inflation the government continues to raise the cost of borrowing and imposing price controls on food.

Folks in Mexico are in an uproar as the price of corn tortillas goes up. Corn prices (see below) are tickling the $6 per bushel level. And the chart is wildly bullish.

We've had a series of higher lows on the monthly chart since August  2007. At the same time, world stocks continue to dwindle. The stocks-to-usage ratio is currently at 13.5%, the lowest since 1973-74. That’s considered a tight market. Remember too, the crop is not even in the ground. A hot, dry summer could be devastating.