Corn closed up 3% today. Wheat up another 2%. Silver blasted up 4% to a new all time high - so much for my print day theory on Silver... but back to food and energy.
Farmers the world over are being given every freaking incentive possible to plant corn, beans, and wheat right up to their wive's flower boxes. The old saying "the cure for high commodity prices is high prices" will be put to the test pretty severely. I have no idea how to calculate the world crop system other than to look at prices, production, consumption, and inventory, and given world grain inventories were down (consumption was greater than production) in 7 of the past 11 years tells me that last year's inventory drop might not be a once in a lifetime event.
There are several feed back loops at work here. Oil is in short supply, so the U.S. uses its corn crop to make up for the short fall in gasoline... causing prices to rise, and ranchers to slaughter cattle, and the price increases in corn cause Egypt's underclass to revolt, which spreads to the Kingdom of Saudi Arabia/Algeria/Iran whoever, causing U.S. Oil imports to decline further putting more pressure on corn and ethanol prices....
I could do that a number of different ways... but you get the idea.
This is one of those things that is impossible to improve thru policy response, me thinks, although certain groups are sure to take a stab at it... the unintended consequences of forcing a "no corn for ethanol because its food" thing might well set off more sickness than the original disease. I need to noodle it a bit more... It seems to me it is a personal problem requiring micro solutions or at least micro contingencies.