August 15, 2020
First world Problems That May Presage Larger Issues
Today I ran some errands and took the opportunity to stop at a hot dog joint that has turned itself into a drive-in due to COVID. I actually ordered a cheeseburger, as this is easier to eat on the road, and the burgers at the place are excellent.
Except this wasn't. It was not terrible but something was...off. It took a minute but I figured out what the issue was. The cheeseburger was actually a cheesewhiz burger.
Such supply chain disruptions are only going to get worse are only going to get worse after the recent derecho wiped out 10 million acres of cropland. That storm may be far more consequential than most hurricanes, though it's getting diffident coverage, perhaps because most of those affected were not in 'relevant' zip codes. However, the knock-on effects need to be looked at. A lot of that grain goes to animal feed. Beef is already pricy, because of disruptions due to COVID, but, for instance, with regard to chicken farming the next brood of chicks may not have enough grain in the pipeline.
In addition to this oddball storm, there is believed to be a La Nina event developing, those tend to have deleterious effects on the grain crops of the U.S., as well as the big South American grain producers like Argentina and Paraguay.
At this point we do not recommend taking a long position in grains until after the US harvest. It is possible that a developing La Nina could mean higher grain prices later in 2020 or 2021 if South American grain production is hurt.
Furthermore, a good portion of this years crop has actually been promised to the Chinese, who, with their own food security issues, are depending on the large shipments of grain they signed the trade deal in exchange for.
It's unclear how big an issue the lost crops are going to be in the long run. The U.S. has a lot of reserve capacity after all. However the recent supply chain disruptions may be a compounding factor, and in any event have demonstrated that our food supply chain is more vulnerable to disruptions due to non-intuitive domino effects.
Stock up on food. This is likely to be a rough winter.
Or this all could just be a hysterical overreaction to a bad customer service experience.
Posted by: The Brickmuppet at
03:17 PM
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