How does the lyric go (as sung by Albert King)? “If it wasn’t for bad luck, I would have no luck at all.”
Maybe that song written by Booker T. Jones and William Bell should be the theme song for the global food market right now.
This month China’s agriculture minister Tang Renjian told colleagues at a high-profile government meeting in Beijing this month: “China faces big difficulties in food production because of the unusual floods last autumn. Many faming experts and technicians told us that crop conditions this year could be the worst in history.”
Natural disasters in 2021 damaged almost 30 million acres of crops in China. Record-breaking rains in the central province of Henan in July alone damaged 2.1 million acres of farmland. The floods delayed planting on more than 18 million acres of land, about one-third of China’s total winter wheat acreage. The amount of first- and second-grade crops, where there are more than 2.7 million seedlings on every acre of land, fell by more than 20% this year compared with normal years. In many of the regions that saw torrential rain last year, farmers couldn’t harvest their corn because their machinery couldn’t handle the water. There wasn’t enough infrastructure such as pipes and systems to drain fields.
The long-term news is even worse. Climate change, which produces more frequent extreme wether events and increasingly unpredictable weather patterns are forecast to reduce yields of China’s three major staple foods–rice, wheat, and corn — by 8% by the end of the decade, according to World Resources Institute.
President Xi Jinping has made food security a priority for China, which means that any crop shortages lin the country become the world’s problem as China bids for globally constrained food resources.
Back on March 4, 2022 I added the iPath Bloomberg Commodity Index ETN (DJP) to my Volatility Portfolio on my JubakAm.com and JugglingWithKnivs.com subscription sites. The ETN is up 1.53% since then as of the close on March 23.
Today I’m adding the ETN to my Jubak Picks Portfolio as well with a target price of $46 a share. The ETN closed at $38.50 on March 23, up 2.89% on the day. The ETN is up 12.2% in the lat month and 30.4% for 2022 to date.
