5 ms·

Worth noting that the article states that the current year crop is projected to be a record high: >For cereal production, FAO projected a record world crop of

Worth noting that the article states that the current year crop is projected to be a record high: >For cereal production, FAO projected a record world crop of 2.800 billion tonnes in 2021, up slightly from 2.788 billion estimated a month ago. So the prices are not wholly related to production, nor mere supply and demand. The shipping container shortage, labor shortages in many countries are more significant contributors.

docdeek 5y ago
The paragraph after also notes that even this record production is below demand: "For cereal production, FAO projected a record world crop of 2.800 billion tonnes in 2021...That would be below world cereal use of 2.811 billion tonnes..."
- mastazi 5y ago
  > below world cereal use of 2.811 billion tonnes How can use be higher than a record-year's production? Did they mean "demand" or they actually meant "use"?
  - mbrubeck 5y ago
    It means that reserves are lower at the end of the year than at the start.
    - mastazi 5y ago
      Makes sense.
  - dbuder 5y ago
    Storage.
    - mastazi 5y ago
      Right. Cereals are stockpiled in many countries.
missedthecue 5y ago
Or, good old fashioned monetary inflation. A lot of money printed globally in the last 24 months.
- imposterr 5y ago
  Shh, don't use the "I" word, or you'll summon it.
- stickfigure 5y ago
  I'm a bit confused by how this would work. I get that extra money lets people bid up the price of assets like homes, but it's not like people are suddenly going to start eating twice as much breakfast cereal. At least in the western world, there is no shortage of basic foodstuffs and no reason to bid them up.
  - missedthecue 5y ago
    If the breakfast cereal makers have to bid up the inputs, who do you think they pass those costs on to?
    - stickfigure 5y ago
      That just punts the same question - why are the inputs being bid up? Is there more demand for wheat than before? Where in the production chain is the item whose scarcity triggers a bidding war?
      - jimmydorry 5y ago
        More money in the hands of investors with the looming threat of increased inflation would lead to investors demanding higher rates of return for their investments at each step in the supply chain. And when the system is flooded with money, you can also expect companies to expand while the cost to borrow is cheap and for new entrants entering and attempting to grab a market share. More companies or expanding companies vying for more raw material / services leads to higher demand from suppliers (hence the bidding GP mentioned). There are likely other mechanisms in play too, and probably much simpler ones than this, but this was the first mechanism to cross my mind when seeing your question.
drfxyjhdyfrhgc 5y ago
Shipping is also not the issue. https://www.spglobal.com/platts/en/market-insights/latest-news/shipping/092221-record-volumes-push-us-container-ports-up-in-global-rankings-alphaliner https://www.spglobal.com/platts/en/market-insights/latest-ne... >The busiest US container ports are moving up the global rankings amid record import volumes, but the deluge of cargoes continues to exceed capacity with growing ship queues on both the East and West Coasts.

docdeek 5y ago

The paragraph after also notes that even this record production is below demand: "For cereal production, FAO projected a record world crop of 2.800 billion tonnes in 2021...That would be below world cereal use of 2.811 billion tonnes..."

mastazi 5y ago
> below world cereal use of 2.811 billion tonnes How can use be higher than a record-year's production? Did they mean "demand" or they actually meant "use"?
- mbrubeck 5y ago
  It means that reserves are lower at the end of the year than at the start.
  - mastazi 5y ago
    Makes sense.
- dbuder 5y ago
  Storage.
  - mastazi 5y ago
    Right. Cereals are stockpiled in many countries.

missedthecue 5y ago

Or, good old fashioned monetary inflation. A lot of money printed globally in the last 24 months.

imposterr 5y ago
Shh, don't use the "I" word, or you'll summon it.
stickfigure 5y ago
I'm a bit confused by how this would work. I get that extra money lets people bid up the price of assets like homes, but it's not like people are suddenly going to start eating twice as much breakfast cereal. At least in the western world, there is no shortage of basic foodstuffs and no reason to bid them up.
- missedthecue 5y ago
  If the breakfast cereal makers have to bid up the inputs, who do you think they pass those costs on to?
  - stickfigure 5y ago
    That just punts the same question - why are the inputs being bid up? Is there more demand for wheat than before? Where in the production chain is the item whose scarcity triggers a bidding war?
    - jimmydorry 5y ago
      More money in the hands of investors with the looming threat of increased inflation would lead to investors demanding higher rates of return for their investments at each step in the supply chain. And when the system is flooded with money, you can also expect companies to expand while the cost to borrow is cheap and for new entrants entering and attempting to grab a market share. More companies or expanding companies vying for more raw material / services leads to higher demand from suppliers (hence the bidding GP mentioned). There are likely other mechanisms in play too, and probably much simpler ones than this, but this was the first mechanism to cross my mind when seeing your question.

drfxyjhdyfrhgc 5y ago

Shipping is also not the issue. https://www.spglobal.com/platts/en/market-insights/latest-news/shipping/092221-record-volumes-push-us-container-ports-up-in-global-rankings-alphaliner https://www.spglobal.com/platts/en/market-insights/latest-ne... >The busiest US container ports are moving up the global rankings amid record import volumes, but the deluge of cargoes continues to exceed capacity with growing ship queues on both the East and West Coasts.