5 days ago • Posted by Charles-Henry Monchau
China is stockpiling soft commodities like never before, pushing prices to the roof.
China is stockpiling agricultural commodities. E.g corn imports in last quarter were more than the imports in last financial year. Meanwhile, the US, which is the largest Agriculture exporter in the world is going through “severe drought conditions”. Consequently, wheat, soya bean prices are touching 7-8 years high. The reason why China is stockpiling so much when the prices are already rising rapidly is not clear. One explanation could be that they are going though severe drought as well (think about climate change). Bottom-line: it seems that other Emerging Market countries will have to sacrifice growth to contain food inflation. Last but not least, let's keep in mind that 10 years ago, Arab Spring started in part due to rising food prices. So maybe we should get prepared for similar types of social unrest and instability if food prices continue to soar. Source: Ritesh Jain, China Customs