‘Arab Spring’ Risks Flourish As Global Food Prices Jump To Record High

Via ZeroHedge

Global food prices soared to a new record high in February, led by a massive jump in vegetable oil and dairy prices as well as higher costs for grains, according to the UN Food and Agriculture Organization (FAO). The move higher in food prices comes as the Russian invasion of Ukraine sent commodity markets into disarray, which indicates prices could continue to surge and may trigger another ‘Arab Spring’.

The FAO Food Price Index (FFPI), a measure of the monthly change in international prices of a basket of food commodities, averaged 140.7 points in February, up 3.9% from January, +24.1% compared with the same month last year, and 3.1% higher than the record in February 2011.

The largest mover in the index was FAO Vegetable Oils Price Index, up 8.5% over the previous month to a new record high, driven by palm, soy, and sunflower oils. The second-largest was the FAO Dairy Price Index, up 6.4% over the prior month. The FAO Cereal Price Index was +3%.

FAO economist Upali Galketi Aratchilage said crop condition concerns and congested supply chains only tell one part of the story of why food prices are soaring.

“A much bigger push for food price inflation comes from outside food production, particularly the energy, fertilizer and feed sectors.

“All these factors tend to squeeze profit margins of food producers, discouraging them from investing and expanding production,” Aratchilage said.

The February report was likely compiled before the Russian invasion of Ukraine. Since then, commodities markets have been skyrocketing. This week alone, the Bloomberg Commodity Index recorded its largest weekly gain since the stagflationary period of the mid-1970s over the turmoil.

We noted how the invasion has choked off more than a quarter of the global wheat trade, about a fifth of corn, and 12% of all calories traded globally.

The conflict has sent wheat futures to an all-time high.

Shortage fears have sent the Bloomberg Agriculture Spot Index to new record highs

Goldman’s chief commodity strategist Jeffrey Currie recently warned he’s never seen commodity markets pricing in the shortages they are now.

Upending global food markets will likely mean the inflation story is far from over as prices could track higher. This has been a cause for concern by the president of the World Bank, David Malpass, warning about the damaging impacts of the conflict on global food supplies, prices, and further tangled supply chains.

Malpass said the invasion has pushed up food prices, which is a “real consideration” for those living in emerging market economies because more of their household budgets are dedicated to purchasing food.

He added: “There’s no way to adjust quickly enough to the loss of supply from Ukraine and from Russia, and so that adds to prices.”

Everyone’s favorite permabear, SocGen’s Albert Edwards, opined two years ago about future agricultural price shocks and how they could cause another Arab Spring of early 2011.

With a food crisis imminent, Edward’s prediction of another round of social unrest due to soaring commodity prices could be nearing as food prices are now above 2011 levels.

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flash
flash

America used to be a nation of very unhealthy fat people, but now on the new Putin diet America suddenly becomes slim and trim.
ummmm..these toasted grasshoppers are great. Thank you globohomoschlomo.

hardscrabble farmer
hardscrabble farmer

I like that moniker.

pyrrhuis
pyrrhuis

Don’t you prefer the crickets?

Ginger
Ginger
pyrrhuis
pyrrhuis

There will be mass starvation as a result of these dangerously idiotic “sanctions”….Oil, gas, fertilizer, and many scarce raw materials will be embargoed by the financial restrictions, and Russia and Ukraine are major sources of wheat for export…

B_MC
B_MC

The natives are growing restless. Probably a good idea to stay away from crowds….

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Ginger
Ginger
Fleabaggs
Fleabaggs

“They” have been promoting this new Arab Spring narrative since day 3 of phase II of the great reset. Something I think should be mentioned is all the financial pundits who weighed in on the replacement of the US Petro Schekel as the world reserve currency would take at least 10 more years. I was the only non pundit claiming it was at the very door in the fall of 2019.

Jdog
Jdog

Basically what we are looking at is a lot of hunger and possibly some starvation in the third world. In Europe you are looking at shortages and huge inflation, not to mention obscene energy prices. Probably no shortages in the US because we can afford to pay the most, but do not be surprised if bread hits $7-10 a loaf by next fall…. gas could easily hit $6-7 dollars so long as Brandon’s energy policy does not change… Expect a lot of ranchers to reduce herd size to cut down on buying overpriced feed, which will make meat prices spike to levels you will not believe.
We are basically loosing 30-40% of the worlds grains and fertilizer. Not to mention the oil and natural gas.

My wife went to Costco this morning and said she was surprised at all the people using the big carts more than the regular ones. I told her the hoarding is beginning.

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