food shortagesAnother lackluster monthly jobs report took center stage Friday. Stocks rallied, and government bond yields remained at rock-bottom levels as investors anticipate more action soon by the Federal Reserve to drive down interest rates even further.

Reports about how much slack the U.S. economy still needs to work through -- like unemployment -- understandably get the spotlight. But investors may be overlooking an even bigger story as the developing world stages a sharp rebound: Shortages of items like food and commodities are once again becoming a major concern.

Prices for agricultural commodities spiked so much on Oct. 8 that they triggered daily movement limits on the Chicago exchange. Options markets saw prices for commodities like corn soar more than 13% during the day following reports of supply shortages around the world.

Commodity-oriented exchange-traded funds like the PowerShares DB Agriculture (DBA) leaped as well. The ETF surged almost 10% over the previous week, with more than 6% of the gains registered on Friday alone.

Supply and Demand Discrepancies

A sharp shortfall in the U.S. Department of Agriculture's corn production forecast, due to poor weather patterns, also helped set prices soaring around the world. U.S. corn crop yields would come in 4% short of prior estimates and drop to their lowest levels in 14 years, the Agriculture Department said.

Fears of commodity shortages in the face of surging global demand are leading to export-slashing. Ukraine announced a sharp cutback in the amount of commodities like wheat and barley it would allow to be shipped out of the country. The likelihood of a major discrepancy between supply and demand have led to surging prices worldwide. European wheat prices rallied 10%, with other commodities, such as soybeans and cotton, climbing as well.

Still, investors should be cautious because commodity prices are known to be extremely volatile and difficult to put a price on.

Fundamental Forces

Nevertheless, rising prices are creating alarm about humanitarian concerns. Morgan Stanley (MS) and the U.N. have warned about the prospects of a rerun of the 2007 food crisis that slammed the developing world.

Beyond crop shortfalls amid recovering worldwide demand following the financial crisis in 2008, additional factors may also be pushing prices up now.

Massive liquidity injections by governments around the world coupled with the rising chances of currency wars, in which countries seek an advantage by devaluing their currency, are likely to play an increasing role in rising commodity prices as well. Even more fundamental factors like steep population growth and a preference for more resource-intensive foods like meat make it easy to see where the booming demand is coming from.

Policymakers in the developed world are constantly warned of the unintended consequences of their search for quick fixes. Adding more heat to a simmering food crisis would be among the most damaging results.

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Geina

Your food shortage probably won't affect my life much. I was raised growing our own food, along with fishing and hunting. Good luck to the rest of you though.

October 12 2010 at 9:54 AM Report abuse +3 rate up rate down Reply
thedtecter

US corn production down 4%, price of corn up 13%. No wonder gas prices are so high! Those poor, starving people of the world are driving up the price and preventing that cheap corn from getting to the ethanol refineries.

October 12 2010 at 8:51 AM Report abuse -2 rate up rate down Reply
lfleamarketmama

AMERICANS HAS BROUGHT THIS ON THERE SELVES. YOUR CITY COUNCILMAN IN YOUR TOWNS AND CITYS HAS DONE THIS TO US. THEY DON'T WANT GARDENS IN OUR BACK YARDS, THEY WON'T LET YOU HAVE CHICKENS, OR COWS, OR HORSES. EVEN THO YOU HAVE THE LAND TO KEEP THEM.IF A DEPRESSION COMES AGAIN, AMERICANS WILL STARVE. AND DO YOU THINK BUSH, CLINTON, OR OBAMA, WILL STARVE, NO WE WILL STILL BE PAYING THEM ALL A SALARY AND KEEPING UP THERE HOMES, AND CARS. THEY WILL STILL HAVE COOKS, HOUSEKEEPERS. BUT YOU WILL BE STARVING.OUR TOWN HAS GONE FROM A LITTLE COUNTRY TOWN TO BIG BUSINESS, AND ALL OUR COUNCILMAN WORK AT A REFINERY. NO ONE WANTED TO LIVE HERE, BUT THEY ALL LIVED AROUND US. NOW SENCE THE BLACKS HAS TAKEN OVER THERE PLACES, THEY CAME AND ARE CHANGEING OUR WAY OF LIVING. I WISH THEY WOULD GO BACK WHERE THEY CAME FROM. AMERICANS NEED TO TAKE BACK AMERICA, AND IF THE BLACKS, MEXICANS, RAG HEADS, CHINESE, DOESN'T LIKE IT, LET THEM GO HOME.SINCE ALL OF THEM WANT TO BE AFRICA, MEXICO, SAUDIES, AND CHINA. BUY THEM A TICKET.

October 12 2010 at 8:51 AM Report abuse rate up rate down Reply
lfleamarketmama

Paying the farmers not to plant, and beleive me it is a lot. is what is making food shortage. people in texas and louisiana get a lot of money for just not planting. So they can bring in foreign food and vegs and fruit. I have a friend that has a lot of land, and she just sets back and draws the money from the gov. with people starving and having no jobs, looks like our gov. would try to help the people every way they could. but it is the tax payers money, so lets spend it foolishly. The people with all this land should have to keep it cut, and cleaned up. i bet they would get rid of it, if they had to clean it.

October 12 2010 at 8:32 AM Report abuse rate up rate down Reply
dvdfrnzwbr

McDonalds sill has Big Macs. This article is bull.

October 12 2010 at 7:27 AM Report abuse +1 rate up rate down Reply
Bearmaul

I'm so happy Obama is president, he predicted no COLA increases for seniors and the disabled and with food prices soaring that just means we can starve out those old folks just like Jimmy Carter tried to do, and the disabled, how great is this, give them a choice between drugs or food.

October 12 2010 at 5:34 AM Report abuse +1 rate up rate down Reply
jhnsnphil

Keep making babies, they are so cute! It's sad but when they die their cause of death may be starvation.

October 12 2010 at 5:15 AM Report abuse -1 rate up rate down Reply
1 reply to jhnsnphil's comment
alfredschrader

What you do is plow the soil, plant the wheat seed, harvest the wheat 68 days later, grind it into flour, make the flour into loaves of dough, bake it into bread....Lunch.

October 12 2010 at 5:28 AM Report abuse +2 rate up rate down Reply
toosmart4u

Hey Commander Vick, Bush and the republicans did nothing to stop the price of oil. So once again you blame Obama, but it was bush that put us where we are at today.

October 12 2010 at 4:31 AM Report abuse -3 rate up rate down Reply
1 reply to toosmart4u's comment
jgoetz9174

"toosmart4u" Bush is the ONLY ONE who did something about the oil prices. Surely you remember when President Bush authorized "off-shore drilling for oil" Saudi Arabia and the rest of the cartel immediately lowered the price of a barrel of oil. The cost of oil raised after President Obama over-rode the Bush era off-shore drilling pact. Then Obama halted all off shore drilling for gas and oil in America after the Louisiana-Gulf of Mexico disaster. And then Pres. Obama gave $2 billion to Mexico to drill in the Gulf of Mexico, and Obama gave $2 billion to South America (Brazil-Petro-Bras) to drill for oil. I think you are real screwed up in interpreting who is the blame for high oil prices. Bush left office almost 2 years ago.

October 12 2010 at 8:15 AM Report abuse +3 rate up rate down Reply
toosmart4u

We export a lot of food which in turn drives up our grocery prices.

October 12 2010 at 4:29 AM Report abuse -3 rate up rate down Reply
commandervick

I would also like to add that the price of oil is too high at 83.00 a barrel to sustain a recovery of world markets.If the present Administration does not get a handle on this,the chances of a double dip recession are very high in my opinion.Emerging markets will be hurt severely by this unjustified increase in oil.I warned in a previous post about this situation.And two days later Donald Trump himself said the same thing on Larry King.This is spring time in the southern hemisphere,they are beginning to plant crops!Fertilizer is oil based supplemented with organics,you know manure.If the costs are not brought under some type of downward movement,the food prices will be increased due to oil.Thank you for my post

October 12 2010 at 2:50 AM Report abuse +3 rate up rate down Reply