China is concerned about food security.
And really, who isn’t these days? After all, the cost of eating has risen dramatically and because human beings aren’t very adept at photosynthesis, we have to find things to eat.
Some of what we eat comes from Russia and Ukraine, and a lot of what we use to enhance our capacity to feed ourselves comes from there too, so it’s problematic when the two countries are at war.
Outside of a nuclear exchange between Russia and the US and the (high) odds of a horrific humanitarian crisis, the biggest risk from the conflict in eastern Europe may be a commodity shock large enough to trigger food insecurity in locales where the vast majority aren’t used to going hungry. Crop prices are through the roof (figure above).
During a political meeting over the weekend, Xi Jinping said China can’t depend on global markets to feed itself. As usual, I’m compelled to rely on Google translate to convey the thrust of Xi’s comments, and as regular readers will attest, translated versions of official Party speeches are often quite funny, even when the subject matter is serious and the stakes high. The translation of Xi’s remarks to the fifth session of the 13th National Committee of the Chinese People’s Political Consultative Conference is no exception. To wit:
Xi Jinping pointed out that food security is of the utmost importance. In all things, eating is the biggest. People take food as their heaven. After hard work, my country has raised nearly one-fifth of the world’s population with 9% of the world’s arable land and 6% of the world’s freshwater resources. From 400 million people who could not eat enough to today, more than 1.4 billion people eat well. This is a strong answer to the question, “Who will feed China?” This achievement is not easy to come by, and we must continue to consolidate and expand. We must not be paralyzed on the issue of food security, and we must not think that when we enter industrialization, the problem of food is optional, and we must not rely on the international market to solve it. We must plan ahead, always tighten the string of food security, and always adhere to the principle of self-reliance, based on the domestic market, ensuring production capacity, moderate imports and scientific and technological support.
Those interested can read the rest of Xi’s remarks here, but that’s the gist of it. I mention it in the context of a historic week for commodities.
Raw materials are coming off their biggest weekly advance in history, some 13%. The surge was considerably larger for certain commodities, with wheat being the most poignant example. The figure (below) gives you a sense of things.
“This week will go down in wheat-trading history,” Bloomberg declared, noting that Chicago futures rose more than 40%.
One consultant who spoke to Kim Chipman and Michael Hirtzer for a separate article said wheat futures “are in ludicrous mode.” The same person called the basis “very scary.”
More broadly, food prices were skyrocketing long before the conflict in Ukraine erupted into a full-fledged war. I regularly update readers on the UN’s FAO gauge. It hit a record high in February (figure on the left, below).
All of the subindexes rose except for sugar (figure on the right, above).
“In February, prices of all major cereals increased from their respective values last month,” the UN said, adding that the increase in world wheat prices “largely reflect[s] new global supply uncertainties amidst disruptions in the Black Sea region that could potentially hinder exports from Ukraine and Russia.”
The problem with waiting for demand destruction to set it in this context should be obvious: Demand destruction is synonymous with starvation.
As Xi so eloquently put it on Sunday, “In all things, eating is the biggest.”
Xi is old enough to remember the last time China starved.
Through several millennia of Chinese history, it’s been peasant rebellions brought on by food supply issues that have brought down dynasties. Chinese leaders are acutely aware of this.
It is dawning on Zi that he did not live up to the commitments of the Trump trade deal. Why he is going along with Putin’s religious war is beyond me?
Out of the goodness of his heart he will show up as the peacemaker. Should NATO and the west be empathetic to starving Chinese and not worry about city dwellers in Ukraine being starved and bombed to death.
Putin was very aware of all the corners he was going to be pushing different nations into.
Zi must also let the Warhawks in China know that trying to take Taiwan now could be suicidal for more than one reason.
If China sides with Putin then Putin owns them.
Being Russia’s sidekick was their way of being last time people were starving in China.
Meanwhile an embargo on Russian energy could be in the cards…
Spent the past week reading/listening/watching various new sources, added/renewed a few new subscriptions (and canceled renewals for others), for current and historical background on this geo-political storm both specifically and in general. I think if one diligently practices digital consumption hygiene there is enough free and open source information available to stay reasonably well abreast of the crisis, but, the subscriptions can be real time savers. Children really must start to be taught by sixth grade how to navigate the digital information age onslaught. One trick I learned from my betters long ago was to mix up information sources every year or two at the most. So like Trump ever on the look out for new lawyers I find times like these spur me to add new candidates to my rotation list.
Last night I sent an email to the Saudi consulate and tried my very best to be ‘diplomatic.’ Doubt I succeeded with any one that can read between the lines in English, but, at least, there were no overtly hostile or provocative words. I wrote blatantly false statements like “peace loving people of the SA and US…”, blah, blah, blah, on the assumption honey catches more flies. Anyway, the gist of it, since I don’t have to layer on the BS here, was, unless SA knows some good recipes for making a tasty sweet crude oil stew or something, their going to need uninterrupted grain supplies or their ‘neighborhood’ is likely to get ‘restive.’ Talked about how being flush with petro-dollars may help in times of relative peace, but, that in a hot war Putin may feel the need to stock his White Nationalist Base’s grocery shelves first. Speculated about how, whatever the source, no amount of money can buy grain that isn’t exported. Theorized about how the ‘evolution’ of shoulder-fired weaponry and new versions of highly lethal yet simple to operate drones are probably about to go parabolic. Even how simple ‘democratizing’ weapons operable by a single man, or heaven forbid woman, have violently turned the pages of history for regimes that relied on highly centralized concentration of power in the past, and, to imagine for a moment more, how these two technologies might cross pollenate amongst themselves and then what little nightmares they might produce mated with the IED. And because I fervently seek stability in the Middle East as much as my country’s “friends” (or is it allies? afterall, what is war but a sorting machine for the taking of sides) desire peace I wondered given Putin’s war-machine’s over-reliance on railways how it might further hinder grain transport overland. Especially, as he really never had enough heavy trucks to begin with and he most definitely doesn’t have enough trucks now. As for Russian rail gauge I complimented my SA reader on their storied association with our shared hero Lawrence of Arabia and let them do the math on that one. Obviously, it would seem not worth mentioning Ukrainians would rather die than see a single kernel shipped to any non-allied country, but, I did anyway with an indirect reminder that there are now shoulder-fired missiles designed for ships. Will the wonders of war never cease? And on, and on, it went.
Obviously, I don’t give a flying **** what happens to the psychotic Princelings of the Oil Kingdoms beyond their strategic and tactical usefulness in a strictly Cold Warrior sort of way. Doesn’t mean I want to see their people or the migrant workers suffer unnecessarily if it can be avoided. I may have also obliquely touched on how what is, and is not, “unnecessary” differs when the guiding principle of the West’s wars switches from the lowercase “l” liberal democracy fevered-dream-state in a post cold war setting to an environment more like a cold war as it was before the Soviet collapse when proxy wars were cooking-off everywhere deemed useful and rapidly shifting geo-power-politics could shift alliances overnight. I’d hope the “lamestream” media begins to reconsider the Biden rapid withdrawal from Afghanistan in that new ‘old’ light of days forgotten by some, and not yet experienced by many, in the ranks of the news corps.
So why bother? Probably because I still feel like supping on the blood and entrails of the Russian Borshch every time I see pictures of Ukrainian babies, children and their mothers shredded by psychotic Putin’s cluster bombs. Okay, I admit it, I respond more emotively to the victims in war where every non-combatant has a high resolution video camera in their pocket than I do when the victims are peasants lucky to have electricity for a few hours each day. Guess I’m just your average despicable shallow human. Speaking of smartphones, that’s a whole new can of worms I bet Pigtootin hadn’t anticipated fully. Expect some terrifying counter-measures against unwitting citizenry in the future if past is prologue. Anyway, I needed to try and retrain myself to express my position without my contempt, even hate at times I suppose, leaking out in the ink. Restraint comes in handy when emailing the key-word aggregating text analyzing bot readers residing in the servers of the decrepit American political system of leadership, and, man have I had some choice words for those clowns!
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The problem with waiting for demand destruction to set it in this context should be obvious: Demand destruction is synonymous with starvation.
It’s a nice turn of phrase and obviously true in the extremes. But people may eat less meat first and since feeding animals is one of the biggest use of grains, that would have a ricochet effect allowing the people down the (food)chain to eat basics (bread/pasta/variations thereof)…
😉 Beef futures of late would seem to support your contention.