Tags: biofuels | food

Evans-Pritchard: Food Prices Will Soar

By    |   Friday, 30 Oct 2009 07:03 AM

British financial journalist Ambrose Evans-Pritchard says that food will never be so cheap again, and biofuels are to blame.

“Barack Obama has not reversed the Bush policy on biofuels, despite food riots in a string of poor countries last year and calls for a moratorium. The subsidy of 45 cents per gallon remains,” Evans-Pritchard writes in the U.K. Telegraph.

“For investors wishing to rotate out of overstretched rallies — Wall Street's Transport index and the Russell 2000 broke down last week — this is a rare chance to buy cheap into a story that will dominate the rest of our lives.”

Biofuel refineries in the United States have set fresh records for grain use every month since May, Evans-Pritchard notes, and will use almost a third of the corn harvest to turn into ethanol for motors this year.

That’s 12 percent of the global corn crop.

Additionally, the world's grain stocks have dropped to 2.6 months cover from four months since 2000, despite two bumper harvests in North America, according to Evans-Pritchard.

“China's inventories are at a 30-year low,” he says. “Asian rice stocks are near danger level.”

In the absence of biofuel mandates and subsidies, biofuels are likely to have trouble competing with food, observes Energy Quest CEO Graeme Bethune, the Gerson Lehrman Group reports.

“Left to itself the market will determine the allocation of resources between food and biofuels,” Bethune says.

“However subsidies, mandates and other government policies providing artificial support for biofuels may well have unintended consequences for food.”

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British financial journalist Ambrose Evans-Pritchard says that food will never be so cheap again, and biofuels are to blame.“Barack Obama has not reversed the Bush policy on biofuels, despite food riots in a string of poor countries last year and calls for a moratorium. The...
biofuels,food
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2009-03-30
Friday, 30 Oct 2009 07:03 AM
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