The price of raw cotton reached 90 cents a pound, up from the 40 or 50 cent average. There is a drought in China and India, while Pakistan is flooded, further exacerbating the cotton shortage and boosting raw cotton prices. We may even see a revival of cotton growing in the Yezreel Valley, Israel. How to ride this situation?
It seems to me that cotton is not the only agricultural product entering a shortage phase. Coffee and wheat are scarce too. Climate is changing faster than agricultural technology and infrastructure, which is always local. Asyncronous development will increase scarcity and hoarding. The Economist has an article about the shallowing of world ag markets. Ag inputs are going to be the next thing. Change your investing plan: Think Israel Chemicals and Machteshim Agan shares.
5 comments:
I've noticed over the past years that the one item of consumable spending that keeps going up in cost is food and energy at an average of about 10% per year. No one likes to skimp on food as that will make one's reduced circunstances only too apparent. There has been a widespread destruction of the economic value of industrial production due to the efficient Chinese. Nothing comparable is in offing for agriculture, with the cost of its inputs such as land and fertilizers slated to go up. From some accounts, the Chinese have massive ecological disasters on their hands, from poisoned rivers to the relentless advance of the Gobi desert. This is why I have never taken the nonsense about China overtaking the world seriously, they will be coming up against their production possibilty barrier in agriculture shortly.
They are simply renting/buying agricultural land in Africa, etc, and will soon solve their agricultural problems.
Anon.
I had an aquaintance who runs a rubber plantation in Africa (Malawi? ) with Chinese labour and I have seen trucks with Chinese markings in tea plantations in Sri Lanka. All these may not be enough as the pressure on agricultural inputs grow.
Large scale agriculture is not something one can set up in a few years. And by then the natives will grow restive. There is no fast solution to this problem. And the doggie option is not available anymore in China.
Update: Machteshim Agan has been downgraded. The analysts say Sell.
Post a Comment