$1.25 per pound, in the grand scheme of things, doesn't sound like much of a problem - especially when remembering that recent forwarded email which compared the prices of life's wonderful liquids on a per gallon basis (Chanel No. 5 is $26,500 per gallon). That is to say, apples at $1.25 a pound out of season is a great deal. Of course, I am not pontificating about apples (though I had an amazing Fuji the other day). Today's discussion is on rice - it's in fairly high demand these days. I should know; I just bought this 50 lb bag. Perhaps I shouldn't have. First some background.I recently starting following commodities - that sounds more austere than it should. I'm really only following two or three of them: corn, wheat and rice. I was once planning on moving to Iowa where I though it would be great to spout off those prices during an interview with the local hiring manager. Now, I really only sound smart to my Bishop/farmer/agricultural lobbyist/neighbor. Here is a brief recap on everything you've always wanted to know about those three commodity prices (but were afraid to ask): they're increasing. I even have a graph or two:
The second graph doesn't do justice to corn prices. The price of corn is up over 70% in the past year and has more than doubled in the past two years. My favorite culprit: ethanol. Ethanol production is on course to account for some 30% of the U.S. corn crop by 2010. The International Monetary Fund estimates that corn ethanol production in the U.S. fueled at least half the rise in world corn demand in each of the past three years.
What we have here is a perfect storm: increased global demand, unaccomodating global weather, bad energy policy (read: ethanol), short sellers and very small stockpiles. Next thing you know, Haitians are storming the presidential palace out of hunger (the president had to leave the country); countries are hoarding supplies and this (courtesy Yahoo news):
"The two biggest U.S. warehouse retail chains are limiting how much rice customers can buy because of what Costco and Sam's Club called on Wednesday "recent supply and demand trends."
So, to make a long story even longer - I forward the above article to Diahan, knowing exactly what she would say: buy, Buy, BUY! So we did. We contributed to the panic - in effect, fulfilling the self-fulfilling prophecy. And while we love Costco and wouldn't mind telling our grandkids that we were a part of the great Costco rice rush of 08, we went to a really nice little Asian market on Redwood and north of here. Maybe you know the kind. The kind that reminds you why we eat only a small percentage of the world's "edible" food. Yet, they sell the most amazing Jasmine rice! Once you've had Jasmine rice, you can't go back - unless there is a global food crisis and Thailand stops exporting rice (as they are threatening to do right now - India already has).
Two hours after forwarding the now infamous article, I am buying rice in a wonderful 3rd world section of West Valley City for twice as much as it was 10 months ago: $40 a 50 lb bag!
Sure, there are still likely several thousand pieces of rice per $1.25 a pound, but now we think twice about throwing the Jasmine rice at weddings.
3 comments:
I cannot believe you guys have the time to do this. Weren't you just moving? And having a baby in under 2 weeks or so? We were just talking about the commodities market and how buying futures works with Daniel. It makes for interesting after dinner conversation. We are part of the lower class that talks about how it affects us, instead of the people doing it.
When we read about the riots in Africa we ran out to Costco and bought 100lbs. of flour. Rice is next on the list. But the thing that's nice about living in Ohio is that people aren't as preparedness-minded as they are in Utah so prices and demand haven't jumped like they have there. Yet another reason why you should move here--the main reason being that you would be close to us, of course!
Just stopped by the same Asian market. It's now $43 per 50 lb bag.
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