Monday, September 13, 2010

Food Scarcity

The Worldwatch Institute regularly predicts an increased scarcity of grain worldwide in the coming years and warns that the world is about to run out of food. How could you use the commodity futures page in the newspaper to evaluate this prediction? If professional speculators disagree with the forecasts of the Worldwatch Institute, in who forecasts would you have more confidence? Why?

3 comments:

Hanqing Xu said...

I doubt if the prediction is accurate enough. I think it’s wrong about whether the world will run out of food. I read some newspapers online and most of them show that the grain worldwide in the coming years should not be an increased scarcity. The gap between the production and total use is narrow. Some of them such as wheat, corn, the production were even higher than the total use. If professional speculators disagree with the forecasts of the Worldwatch Institute, I have more confidence in professional speculators. Commodity trading leads to financial losses for most people. I think we need to know when the price of the grain is cheap or expensive compared to supply and demand. Supply of a grain is the sum of beginning stocks, production, and imports. Demand of grain is the sum of grain consumed or processed in markets. If the demand is high, producers need to hold supply. When the demand is low, people tend to put off purchases to avoid high storage price. So the demand and supply should be in balance. So I agree with the professional speculators.

Yang Yang said...

If the farmer know an increased scarcity of grain worldwide in the coming years.They will save grain for the next year. They will expect they could get a good price in the future.So we could check the volume of sales to test the report.If the volume reduced,the forcast is right.
The professional speculators follow the personal benefit.I don't believe them.They expect they could get max profit.For example,They disgree with professional speculators disagree,because they want to save the grain for the next year.If farmer believe them, they would sell grain now, the professional speculators could buy a plenty of grain at a cheaper price.They could see grain at a higher price in the next year.

Greg Delemeester said...

Hanqing: Your answer doesn't explicitly address the conditions described in the first part of the question.

Yang: Leave the farmers out of it. Focus on the prediction of the Worldwatch Institute versus speculators.