MacroVoices #381 Leigh Goehring: Global Food Crisis Update
Lee Goehring provides an update on the developing global food crisis, arguing that strong grain demand from emerging economies transitioning to protein-rich diets is colliding with weather-related supply disruptions. He believes this decade will see rolling agricultural crises, with current events representing only the early stages of a much larger crisis.
Summary
Lee Goehring returns to discuss his thesis about an emerging global food crisis, emphasizing that the world is only in the early innings of what will be a decade-long series of agricultural crises. He explains that the fundamental driver is unprecedented numbers of people in emerging economies moving through the $500-$7,000 per capita GDP range, during which they transition from starch-based to protein-rich diets, dramatically increasing grain demand. This has caused global grain consumption to grow from 1.3% annually (1980-2000) to over 2% (2000-2020), with an additional 6% growth since 2019. Simultaneously, Goehring argues that weather patterns are becoming increasingly disruptive due to what he believes is a global cooling cycle linked to declining sunspot patterns, contradicting mainstream climate change narratives. He discusses the transition from La Nina to El Nino conditions and references the Gleisberg cycle, suggesting North America could face dust bowl-like conditions. The Ukraine conflict has removed significant grain export capacity, with Ukrainian wheat exports down 50% and corn exports down 40%. Goehring warns of food nationalism emerging as countries ban exports to protect domestic populations, further tightening global supply chains. He views current food inflation as merely the beginning, predicting more severe shortages and price spikes ahead. For investment opportunities, he favors fertilizer companies like Mosaic and Nutrient, which have pulled back 40-50% from highs but should benefit from higher grain prices. He also highlights short-term bullish views on US natural gas and uranium, citing structural supply-demand shifts.
Key Insights
- Global grain consumption has accelerated from 1.3% annual growth (1980-2000) to over 2% (2000-2020), with an additional 6% increase since 2019 alone
- Unprecedented numbers of people are transitioning through the $500-$7,000 per capita GDP range where dietary preferences shift from starch to protein-based diets
- Weather disruptions are being driven by a global cooling cycle linked to declining sunspot patterns rather than global warming, according to Goehring's contrarian view
- The Gleisberg cycle suggests North America could face dust bowl conditions in 2023-2024, representing an 88-year cycle from the 1930s drought
- Ukraine's grain export capacity has been severely compromised, with wheat exports down 50% and corn exports down 40% from peak levels
- Food nationalism is emerging as countries ban agricultural exports to protect domestic populations, further tightening global supply chains
- Current food inflation represents only the early stages of a decade-long series of rolling agricultural crises
- US natural gas prices could converge with international prices, potentially rising from $2.60 to $13 within six months as the market shifts from structural surplus to deficit
- Fertilizer stocks like Mosaic and Nutrient have pulled back 40-50% from highs but remain positioned to benefit from higher grain prices
- The transition from La Nina to El Nino, combined with negative Pacific decadal oscillation, historically produces drought conditions in North America
- Current US drought conditions across large swaths of the country could severely impact corn and soybean yields if dry patterns persist
- The uranium market could become chaotic as the Sprott Uranium Trust competes with utilities for spot uranium purchases
Topics
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