The global shift in power and the race for remaining resources is on. The U.S. is a little late, in my opinion, and Alaska is one of the best resource states we have. So we better start using it.
As I have been telling you for months now, the grain markets are red-hot, and so are many stocks that are related to farming and agriculture. The ethanol boom has been the big driver, but so has demand form China and India. These two countries have a growing segment of their populations that have the desire and ability to purchase things that used to be considered luxuries.
Feeding the Hungry Dragon
It’s mind-boggling to imagine the number of people in China, and they all need to eat and to drink clean water. The recent drought in the north and flooding in the south have destroyed crops that are so vital to the survival of so many. The wheat crop has been hit especially hard in the region, as it has in many parts of the world. Grains play a very important role in the Chinese diet -- from rice to soy and many things in between. For over 2,000 years, the Chinese have turned soybeans into tofu -- a major staple for Chinese consumers.
However, as the Chinese economy has improved, so have the appetites of its people. Today, more and more Chinese seek out pork, poultry and beef, which require higher volumes of soybeans as animal feed. So China is faced with some daunting tasks to meet demand and to maintain its growth. It’s a tough task, indeed. I give the Chinese credit for realizing that ethanol from grains is not only inefficient, but also threatens the food supply.
China will switch from grain as the main ingredient in ethanol production to a more economical crop material, according to an official with the National Development and Reform Commission (NDRC), China’s top policy planner, speaking at a meeting in April.
Big Trouble in China
China’s scramble for natural resources is leading to a transformation of the world's grain trading, and it will for many decades to come. China is faced with vanishing cropland and dwindling water supplies. Our colleague Chris Mayer has written extensively about this problem, and has found some very good ways to play it, too. I will try to get some stock names from him and pass them on to you next week. You may already have them if you’re a member of the Agora Financial Reserve.
Anyway, all of these infrastructure problems are hampering the ability of China to feed itself. Meanwhile, as the U.S. uses more and more of its farmland to produce biofuels like ethanol, we have less to export. This is forcing China to shop for its agricultural needs elsewhere. China is now relying on South America, where land is still inexpensive and plentiful, and it’s gobbling it up fast.
It will be very interesting to see how this plays out in the next five years or so.
As I have been telling you for months now, the grain markets are red-hot, and so are many stocks that are related to farming and agriculture. The ethanol boom has been the big driver, but so has demand form China and India. These two countries have a growing segment of their populations that have the desire and ability to purchase things that used to be considered luxuries.
Feeding the Hungry Dragon
It’s mind-boggling to imagine the number of people in China, and they all need to eat and to drink clean water. The recent drought in the north and flooding in the south have destroyed crops that are so vital to the survival of so many. The wheat crop has been hit especially hard in the region, as it has in many parts of the world. Grains play a very important role in the Chinese diet -- from rice to soy and many things in between. For over 2,000 years, the Chinese have turned soybeans into tofu -- a major staple for Chinese consumers.
However, as the Chinese economy has improved, so have the appetites of its people. Today, more and more Chinese seek out pork, poultry and beef, which require higher volumes of soybeans as animal feed. So China is faced with some daunting tasks to meet demand and to maintain its growth. It’s a tough task, indeed. I give the Chinese credit for realizing that ethanol from grains is not only inefficient, but also threatens the food supply.
China will switch from grain as the main ingredient in ethanol production to a more economical crop material, according to an official with the National Development and Reform Commission (NDRC), China’s top policy planner, speaking at a meeting in April.
Big Trouble in China
China’s scramble for natural resources is leading to a transformation of the world's grain trading, and it will for many decades to come. China is faced with vanishing cropland and dwindling water supplies. Our colleague Chris Mayer has written extensively about this problem, and has found some very good ways to play it, too. I will try to get some stock names from him and pass them on to you next week. You may already have them if you’re a member of the Agora Financial Reserve.
Anyway, all of these infrastructure problems are hampering the ability of China to feed itself. Meanwhile, as the U.S. uses more and more of its farmland to produce biofuels like ethanol, we have less to export. This is forcing China to shop for its agricultural needs elsewhere. China is now relying on South America, where land is still inexpensive and plentiful, and it’s gobbling it up fast.
It will be very interesting to see how this plays out in the next five years or so.
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