Search This Blog

Wednesday, July 25, 2012

Drought Spreads From US To Asia, And Now To Southern Europe - is this the black swan that will break the Global Economy's back?


The US drought, which as previously noted, is the worst in decades, has already caused corn prices to hit a record, and soy to soar. And as we firstreported last week, and subsequently Bloomberg also caught, Asia could well be next to suffer soaring food prices next as "the monsoon season, which is critical for that country’s agricultural production, is 22% below normal conditions for the year." In fact, if there is one thing preventing the PBOC from engaging in full blown easing, it is precisely the threat that just as it floods the market with excess CNY, that the supply of food will collapse causing widespread riots and chaos a la Arab Spring 2011. And now, just to make sure that the threat of full out global food crisis is complete, and the deep fried black swan has truly gone global, we find that a heat wave in Southern Europe is causing the corn crops to wither in a region that is responsible for 16% of global exports.


Watch video report from Bloomberg

No comments:

Post a Comment