Sunday, October 23, 2011

China food inflation problem will be a gain for US farmers

China premier Wen Jiabao stated the government must continue to control food and housing prices to ease inflation which is currently above 6 percent. This is going to be an interesting test of the Chinese government against the global commodity markets. It was stated by government sources that corn imports may go from 970,000 tons to over 5 million tons in this year. China is willing to use its cash horde to buy as much food as possible to stop price increases. Of course, if you try and hold prices down inside China through buying in the global market, someone is going to get rich at the government's expense. There will be a cash transfer and it will show up in futures prices.  

No comments: