Though prices of the meats, grains, and softs are still off their 2008 highs - they're not off by much anymore - as commodities such as cotton, soybeans, and sugar are starting to rally in a big way.
How could this be? Aren't we in a Depression? Perhaps, but supply has come offline in a big way, while demand has remained strong. As the Economist piece points out: "No matter how bad things get, people still need to eat."
It's looking like, though there were many bubbles in 2008, China's food consumption was not one of them. Back to the article, with some staggering numbers:
China’s role has been profound, reflecting its enormous economic progress and huge population. In the past decade, says Carlo Caiani of Caiani & Company, an investment-advisory firm based in Melbourne, the consumption of milk has grown seven-fold, and that of olive oil six-fold. China is consuming twice as much vegetable oil (instead of less healthy pork fat), 60% more poultry, 30% more beef and 25% more wheat, and these are merely the obvious foods. Scores of niches have expanded dramatically: people are drinking four times as much wine, for example.
And yet even with all this growth, people in China still, on average, consume only one-third as much milk and meat as people in wealthy countries such as Australia, America and Britain. The gap is even larger with India, which is also growing fast. Overall, protein intake in Europe and America is unlikely to expand much, but a combination of rising incomes and population in developing countries could increase demand by more than 5% annually for years to come. “Once people are accustomed to eating more protein, they won’t take it out of their diet,” says Mr Caiani.
And remember, many food stock levels are at historic lows. Unless new supply comes online soon - and I don't know where that supply is going to come from - we could be in for a whale of a rally in food.
Further reading about investment opportunities in agriculture:
