For the last few months, Texas has had, in some places, its worst drought in 44 years. That, along with increasing demand, is why, according to Bloomberg, cattle and wheat prices have gone sky-high:
The worst Texas drought in 44 years is damaging the state’s wheat crop and forcing ranchers to reduce cattle herds, as rising demand for U.S. food sends grain and meat prices higher.
Texas, the biggest U.S. cattle producer and second-largest winter-wheat grower, got just 4.7 inches (12 centimeters) of rain on average in the five months through February, the least for the period since 1967, State Climatologist John Nielsen- Gammon said. More than half the wheat fields and pastures were rated in poor or very poor condition on March 20.
I kept reading and reading and reading, hoping to find some mention of the Federal Reserve’s policy of printing prodigious amounts of money as factoring into the price increases that in turn spurred an illusion of rising demand that in turn spurred a further illusion of shortages, spurring more rising demand as hoarding of precious supplies obtained. Alas, there was nothing. This is getting insanely stupid. It’s almost as if these market reporters were fish in the ocean that didn’t know it was an ocean because, well, they were immersed in it. They need to try to remember, when looking around at all the happenings in a particular market, that they’re in the water, so to speak, so might be missing the big picture flood of money that’s causing the market to churn. Never mind that Texas isn’t even the biggest producer of winter wheat in this country, and only about half of it is suffering from drought. Wheat and cattle trade on international markets, so a drought/poor harvest in half of Texas is statistically highly-likely to be offset by a bumper crop elsewhere.
The journalists can’t even get the weather reporting right:
There is no such thing as a “normal” level of precipitation, unless maybe when considering the mode, or most common, level of precipitation. That’s not what NWS data shows. It shows the average precipitation amounts over the rather limited history that records have been kept. Average precipitation is just that. For every day of the year, there is an average precipitation amount above zero for every place on the earth. But does every place get precipitation every day? Of course not. In a temperate climate like the US’s, most places go several days without rain, then a few days of rain, then several days without, etc. The average daily rainfall is not expected to occur on any particular day, if ever at all. Yet “normal” sounds so much more ominous than “average” until it is almost always used when reporting on droughts.
At least Bloomberg didn’t explain that global warming is the culprit. Though I’m sure that’s coming, in a well-reasoned piece by ostensibly objective journalists, or perhaps by a politico-economist shrill like Paul Krugman. Global warming is to the post-modern culture (specifically including Paul Krugman) what God was to medieval priests–the explanation for every inexplicable naturally-occuring event. Floods in North and South Dakota (as the article mentions): Must be global warming. Drought in Texas: Must be global warming. Riots in the Middle East: Indeed, as Krugman said, it’s just another harbinger of global warming. Global warming is as powerful as God. Or perhaps, it is God, as it seems omniscient, omnipotent, omnipresent and the efficient cause of everything that happens.
Just remember that I told you so, when all this “rising demand” proves illusory; the result of monetary shenanigans, plain and simple, and the increased supply generated by the prices rising in response to this illusory demand finally overwhelms the market and demand crashes, along with prices. Like I’ve said before, my guess is it will happen sometime around mid-2012.