Archive for category Economy
The Coming Wheat Crisis?
Posted by Sonny in Economy, Trading/Investing on June 15th, 2009
Growing up I knew medicine wasn’t in my future, but occasionally I like to read up on interesting issues/ideas in Biology. However there is a topic no one is talking about and maybe they should be: the Ug99 fungus or Stem Rust fungus. What is it? I don’t know fully but it’s a fungus that is killing wheat plants and according to this L.A. Times article, it could destroy up to 80% of the world’s wheat crops. It started in Africa but has already spread closer to Pakistan and will eventually get to the United States. Scientists are in a race to come up with a resistant plant crop, but as of right now, nothing is close to being immune to the fungus. The problem is that the fungus can spread by air so it’s going to get worse before quickly unless a cure is found. This is not new to the World; it has just been a few decades before the stem rust mutated again. This is such a huge problem that the Gate’s Foundation gave $26.8 million in 2008 to Cornell University for research on the situation.
Think this doesn’t have anything to do personal finance? Clearly, if 80% of the world’s wheat crop is gone, this is going to have huge ramifications on our daily food consumption and costs. Remember back about a year ago when everyone was complaining about food and gas prices going up? Well, if these predictions are true, wheat prices could be going up more dramatically than most of us have ever seen in our lifetime. We need to protect ourselves by hedging if this fungus is as dangerous as it sounds. While buying wheat futures contracts might be an option for some, it’s not reasonable for most and I would rather go ETF/ETN route. This might be a little bit easier as you can trade this like a stock and don’t have to set up an account trading futures. Here are several good candidates: DBA, JJA, RJA, JJG, & GRU. I like GRU since, as far as my research shows it is holding about 50% Wheat while the others are more diversified in their holdings. Also, I looked hard for a pure wheat ETF but, as of right now, I don’t think there is one. I will modify the post if I turn out to be wrong. Please note, GRU’s volume is very low so if you are looking just for a hedge this might be right but it’s not as liquid as other stocks/ETFs.
Now I don’t know if this fungus will stop in India when scientists cure it and that’s the end of the whole thing. But one sign that I may be on to something comes from the fact that GRU was only down about 1% while the others are down closer to about 4% today. It could be a number of reasons like lack of volume or just dumb luck. At the present moment, this Stem Rust fungus doesn’t look to be clearing anytime soon. It is important that we spread the word and also look to protect (hedge) ourselves if the fungus does spread as quickly and radically as expected.
photo: usda.gov
Buy American? What Does That Mean?
I was going to write about something else today but I got this email and I wanted to discuss it. Here is the body of the email:
My grandson likes Hershey’s candy. It is marked made in Mexico now. So I do not buy it any more. My favorite toothpaste Colgate is made in Mexico now.
I have switched to Crest. You have to read the labels on everything.
The email goes on to say:
So my challenge to you is to start reading the labels when you shop for everyday things and see what you can find that is made in the USA - the job you save may be your own or your neighbors!
If you accept the challenge, pass this on to others in your address book so we can all start buying American, one light bulb at a time! Stop buying from China or Mexico……….
(We should have awakened a decade ago……)
Let’s get with the program…. help our fellow Americans keep their jobs and create more jobs here in the U.S.A.
If you are flag-waving American like I am, I’m sure the thought of Americans losing jobs is certainly alarming; anyone losing their job is depressing. However, the question in my mind after reading this email is what does “buy American” mean?
In the email above, the person states she doesn’t buy Hershey’s products because the candy is made in Mexico. Hershey’s headquarters, however, are in Hershey, Pennsylvania, USA. I think that at least qualifies it as being American right? So if this person gets enough people to boycott Hershey’s products, couldn’t they themselves be responsible for the loss of American jobs? Let’s think about Toyota’s manufacturing plant in Texas and the Hyundai manufacturing plant in Arkansas: They aren’t American companies but they do provide American jobs. If Americans start boycotting these foreign companies aren’t they responsible for hurting their “neighbors”? Gets a little murky doesn’t it.
Do to globalization trends, manufacturing is going overseas where there is a large labor pool at very inexpensive wages and therefore America is becoming a more service-oriented economy. The tricky part of this whole thing is people in the US, who are in the manufacturing sector, will unfortunately be laid off. These people need to get re-trained. Solving this problem is a complicated issue I will leave for the politicians to tackle but there is no such thing as “buying American” anymore.
