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Chinese Speculators Now Blamed For PLUNGING Food Prices

Tyler Durden's picture





 

While in the US speculators and speculators alone are blamed for surging oil prices, in China we get an example of precisely what happens when speculators get caught on the wrong side of the trade. "Farmers across China are suffering from unmarketable vegetables since the arrival of spring, hurt by an increase in output following speculation last year’s surge in demand would continue in 2011... Many farmers blamed oversupply as the main reason for the poor market. Due to climate factors, leaf vegetables from northern and southern China came onto the market almost at the same time, making the supply much higher than last year...Speculators also played a major role in the price collapse, as they dumped vegetables that they had been hoarding onto the market." That's a new one: so speculators are now to blame for a plunge in prices? Of course, the "speculators" themselves merely took their losses, some went out of business, and the PBoC did not rescue any of them. This way the more incompetent of them are now out of business. In the US, on the other hand, where we are now urgently holding our breath for an ES margin hike to hit the tape any second now from the Globex because the silver bubble has now moved back to the S&P ("where it belongs" - unnamed Fed official), all those who would have placed idiotic bets either way would be promptly bailed out by the Fed, especially if they were the prop trading operation of a TBTF toxic laden monstrosity (here's looking at you mother Merrill). Does one see an issue here?

More from Business China

Last autumn during the height of South Korea's kimchi crisis, a number of Chinese agricultural speculators horded vast quantities of cabbage in cold storage warehouses and waited for prices to pick up.

The problem of oversupply was magnified when those hoarders had to move the winter cabbages out of the warehouses and spring cabbages ripened early due to a warmer climate in the north, forcing cabbage stockpiles up.

Some farmers blamed vegetable dealers for aggravating the situation. They said they did not have much say in the prices and the vegetables were sold at prices many times higher than what the dealers had offered them.

"Vegetables cannot remain fresh for long. They are worthless when left behind by the dealers' trucks," said farmer Han Daokun.

"It was vegetable agents plus high logistics and labor costs that resulted in high prices at the consumption end," said Yu Maijian, a worker at a Qingdao vegetable wholesale market in Shandong Province.

Distribution is the key to the problem. Each link in the distribution chain will increase the price by 10%-15% and there are many links, according to Ling Donghua, research fellow at the Shandong Academy of Social Sciences.

Chinese government authorities have stepped in to help the farmers and deal with the vegetable oversupply.

Of course, you mix speculation with amateur central planning (for the real deal look to the US), and you get some very explosive results:

Some supermarkets, schools and company canteens are on a buying spree in east China's Shandong province as the government urged them to help relieve farmers from a glut of vegetables.

Municipal authorities should take immediate action to "help farmers tackle difficulties in selling their produce and maintain a stable market," said a notice from Shandong's commerce department released on April 22.

The Ministry of Commerce (MOFCOM) and the Ministry of Agriculture have also issued a notice to ask local authorities to take immediate action to "help farmers tackle difficulties in selling their produce and maintain a stable market".

So yes, food "speculators" get the bum rap, and Attorney Generals thawed from cryogenic sleep on their ass when they push prices up and now they are scapegoated for sending prices plunging as it puts all those farmers who scrambled to fill the supply void out of a job, following another artificial intervention by central banks to remove liquidity.

Obviously, in the grand scheme of things it is never the broken Keynesian and broken fiat system's fault. Ever.

 


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Tue, 04/26/2011 - 12:21 | Link to Comment Mongo
Mongo's picture

Somebody is too big to blame... and it aint the chinese terror... speculators

Tue, 04/26/2011 - 13:04 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Yep, the stockpilers are the well-connected oligarchs, duhhhh!

Thats why inflation in food is accentuated in places like China and Egypt, their overlords are notified of the Fed's plans to print money, and the natural reaction (for a psychopath) is to secure as much of the gains for yourself, even if it means hoarding food, letting prices rise more than 20%, and then selling it!

Check out the latest from the Capital Research Institute "Cracks Starting to Show?":

http://www.capitalresearchinstitute.org

Even though the Capital Research Institute was only officially founded 3 months ago, we have already started seeing various predictions come true.  Commodities inflating rapidly?  Check.  Lingering sovereign debt crises?  Check.  Gold and silver at, or approaching, record prices?  Check.  Another conclusion from our analyses was that the US dollar will inevitably lose world reserve currency status.

Others are not as convinced.  Michael Pettis, a Finance Professor, and writer for Financial Times (ft.com) recently argued that although the US should be prepared for a lesser role for the US dollar in the world of finance, fears of its demise are overblown.  Suffice to say, here at the CRI we strongly disagree with that assessment.

Tue, 04/26/2011 - 12:23 | Link to Comment Popo
Popo's picture

Hyperinflation bitchez!  Oh... wait....

Tue, 04/26/2011 - 12:43 | Link to Comment Silver Bug
Silver Bug's picture

The speculators are always the scapegoats, they get blamed when things go up. They get blamed when things go down. They are market makers. Sure there can be distortions, but typically they are only reacting to the policies and events going on around them. I'm sure we will all be called "dirty speculators" one day, for investing in gold and silver.

 

http://silverliberationarmy.blogspot.com/

Tue, 04/26/2011 - 12:55 | Link to Comment Popo
Popo's picture

Those who make a ton of money will be called evil.

Those who make a little money will be called smart.

Those who miss the top will be called bag-holders.

Tue, 04/26/2011 - 13:57 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

The Stalin solution:

Speculators,,,, take 'em out back have 'em shot.

Tue, 04/26/2011 - 15:24 | Link to Comment SilverRhino
SilverRhino's picture

Not as far off as you may think ...

Locusts always want to take from the ants.

Wed, 04/27/2011 - 04:10 | Link to Comment Kopfjager
Kopfjager's picture

Three American industrialists are sitting in prison sharing their "criminal" history.  

The first industrialists says, "I was charging less than all my competitors and they accused me of price cutting my competitors."  The second industrialists says, "I was charging MORE than my competitors and they accused me of price gouging the consumer!"  The third industrialists replies, "I was charging the SAME as my competitors and they accused me of cartelization!"  

 

 

 

Tue, 04/26/2011 - 12:44 | Link to Comment tallen
tallen's picture

If in doubt, blame the speculators!

Tue, 04/26/2011 - 12:51 | Link to Comment Robslob
Robslob's picture

Its great to name "speculators" as the reason...that is just the same as saying "some people"...huh?

Name them if you got em?

Didn't think so...next up...blame the sun...for what, I have no idea.

Tue, 04/26/2011 - 12:55 | Link to Comment SheepDog-One
SheepDog-One's picture

Of course the FED is never a speculator though.
BTW is it just me or has anyone else been having wild lag and access problems with ZH?

Tue, 04/26/2011 - 13:00 | Link to Comment A Man without Q...
A Man without Qualities's picture

There's priority access for high frequency Chinese cabbage traders....

Tue, 04/26/2011 - 12:57 | Link to Comment Vergeltung
Vergeltung's picture

kimchi, bitchez!!

(someone hadda do it. I'll take the hit).

Tue, 04/26/2011 - 13:58 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

You take the hit.

I'll take the hot sauce.

Tue, 04/26/2011 - 13:00 | Link to Comment ElvisDog
ElvisDog's picture

So, how exactly do you hoard vegetables? The lettuce in my fridge turns into a soggy, wilted mess in about three days.

Tue, 04/26/2011 - 12:58 | Link to Comment Cassandra Syndrome
Cassandra Syndrome's picture

Short Cucumber July Futures

 

Tue, 04/26/2011 - 13:02 | Link to Comment buzzsaw99
buzzsaw99's picture

Typical. Speculators are parasites.

Tue, 04/26/2011 - 13:02 | Link to Comment Captain Planet
Captain Planet's picture

That'll be one pre 64' dime please for those carrots.

I offer organic baby back ribs for one Maple.

Hard cider will be sold by the barrel, for three troy pieces.

Thank you for shopping with us.

Shipping can be provided upon request, but it will cost you a leg.

Tue, 04/26/2011 - 13:05 | Link to Comment tmosley
tmosley's picture

This is not meshing with other information out of China.  What the fuck is going on here?  Last I heard, food prices were exploding over there.  If there is suddenly a glut, then why aren't they just exporting the surplus?  I sure haven't seen any reduced prices on leafy vegetables.

Tue, 04/26/2011 - 13:47 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

It is not the speculators, it is merely new found efficiencies in production.

"Vegetables cannot remain fresh for long. They are worthless when left behind by the dealers' trucks," said farmer Han Daokun.

...

Chinese government authorities have stepped in to help the farmers and deal with the vegetable oversupply.

Life gives you rotten vegetables, make mu shu pork!

Chinese Pig Farm On Landfill, Pigs Fed With Garbage

I wonder how one says, "virtuous circle," in Mandarin.

Tue, 04/26/2011 - 14:01 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Great picture. If I ever go back to China, maybe I'll stick with chicken...

Tue, 04/26/2011 - 14:07 | Link to Comment Sudden Debt
Sudden Debt's picture

Every time I'm in Azia, I turn vegetarian.

India beats them all :)

Tue, 04/26/2011 - 14:11 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

I don't worry too much.  Our chickens eat the fly larvae out of our horses' manure, and they still taste delicious, as do the hens' eggs.

Tue, 04/26/2011 - 13:09 | Link to Comment lolmao500
lolmao500's picture

Blamed? What about THANKING THEM?

Tue, 04/26/2011 - 13:43 | Link to Comment buzzsaw99
buzzsaw99's picture

Let's see. July corn is high, I think I plant corn.

 

Consumer pays more, consumer pays more...

 

June expiry: sell! sell! sell!

 

Price crashes, farmer hosed, consumer has been getting hosed a long time. Thank a lot asshole.

I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank. You tell me that if I take the deposits from the Bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves...

Andrew Jackson

Tue, 04/26/2011 - 14:03 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Tue, 04/26/2011 - 14:32 | Link to Comment topcallingtroll
topcallingtroll's picture

The ethnic cleanser in chief was a real man...yo...supreme court...you dont like it? Watcha gonna do big boy? Bring it.

Tue, 04/26/2011 - 13:10 | Link to Comment apberusdisvet
apberusdisvet's picture

Are these the radiated vegetables or the unradiated ones?

I would imagine that since China gets more wind currents from Japan than we do (and we have already seen above legal limits in Milk and leafy vegetables in the Pacific islands and the West Coast), you would think that they may have a problem.

Tue, 04/26/2011 - 13:15 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

Rabbit food is down? So?

Tue, 04/26/2011 - 13:15 | Link to Comment falak pema
falak pema's picture

A speculator is anybody who puts his money where his mouth isn't.

He flies by night and buys by day. He sells when others buy 'cos he knows that he'll get them when they've overstocked, on the way back, like round hipped women ready to dip into bed...he always buy their dips and deep-fries their hips. He sees signs before others and anticipates tipping moments. He knows when government lies or when they hide. He rides the high tide and bides the low until it bottoms; then he jumps in like a horn rimmed viking pagan. So he is super intelligent or super dumb. As he always tries and often misses. But one thing he isn't is super human. He's a cold hearted cunt eater. All he wants is to see it shimmer and then bet it'll go wet before it does...that way he is short on emotion but long on devotion. They always come back for more...

Never ask a speculator why...it's in his blood...he's always looking ahead to bet on the contours of the hidden face of the other side of the next hill. Like that of mysterious woman.

Tue, 04/26/2011 - 13:18 | Link to Comment jack1sparrow
jack1sparrow's picture

http://ocw.mit.edu/index.htm

I would recommend they take a free course, or just continue to eat plastic rice ;p

Tue, 04/26/2011 - 13:26 | Link to Comment Bazooka
Bazooka's picture

Can someone give a didactic summary of how these treasury auctions work?

What are the meanings of Primary dealers take down, bid to cover ratio, etc?

 

Thanks!

Tue, 04/26/2011 - 14:06 | Link to Comment SME MOFO
SME MOFO's picture

any moron who can't use the google doesn't need to know those things.  It's like a child proof cap on information.

Tue, 04/26/2011 - 14:40 | Link to Comment Rogerwilco
Rogerwilco's picture

In keeping with the agriculture theme, here's an analogy. Tractor auctions are where bidders of all stripes go to score deals on farm equipment. At every auction you'll find some guys who always seem to bid until the price reaches a certain point and then they lay back. This puts a floor under the price of used equipment and indirectly supports the pricing power for dealers of new tractors. Doing this in an organized manner is illegal, but it seems to happen quite regularly.

The primary dealers are like those shills in the tractor auctions. Their job is to make damn sure there will never be a failed Treasury auction, and in return they get compensated with fees and other perqs.

Tue, 04/26/2011 - 13:30 | Link to Comment Bastiat
Bastiat's picture

In anticipation of the "speculator" accusation turning on PM bugs:  nobody buying physical PMs is a speculator.  We are "collectors" -- the IRS says so. 

Tue, 04/26/2011 - 13:37 | Link to Comment Whatta
Whatta's picture

Flash Crash in collard greens!!!! Damn those HFT'ing, squid-faced commie-nazis on Wall Street.

Oh-bomb-uh should investigatge.

Tue, 04/26/2011 - 13:38 | Link to Comment ReeferMac
ReeferMac's picture

I think it's due to the snow...

Tue, 04/26/2011 - 13:44 | Link to Comment AldoHux_IV
AldoHux_IV's picture

Again, it's not a problem of scarcity but one of control-- centrally planned control. The G20, IMF, Worldbank, central banks, etc. are responsible for the (put it lightly) horrid mismanagement of the global economy-- only good for creating bubbles/mania and to have them crash thus creating further negative implications upon an already bullshit strained system. 

Supply side economics and Keynesian theory is a joke because in the end you can't stimulate demand by trying to manipulate supply i.e. you can't fake the funk. All these asshole policymakers know is how to manipulate things in order to get people to react-- like cows ready for the slaughter everyone just mozy's on along.  It'll end as soon as the cows realize that pastures are truly greener on the other side of slavery.

Tue, 04/26/2011 - 14:30 | Link to Comment Rogerwilco
Rogerwilco's picture

"hoarding vegetables" ?

LOL -- somebody needs to recalibrate the BS meter at ZH. It's been broken for a couple of weeks now.

Tue, 04/26/2011 - 14:33 | Link to Comment Rogerwilco
Rogerwilco's picture

.dd.

Tue, 04/26/2011 - 14:33 | Link to Comment AldousHuxley
AldousHuxley's picture

American speculators = bid prices up to profit and make citizens pay higher prices

Chinese speculators = bid prices down to profit and give citizens lower prices

Can Chinese speculators do something about energy prices, politician's pension entitlements, ugly old house bubble prices, fluff university tuition prices, medical cartel symtomcare prices?

Tue, 04/26/2011 - 14:37 | Link to Comment Vincent Vega
Vincent Vega's picture

Food prices are "transitory." <sarc>

Tue, 04/26/2011 - 15:35 | Link to Comment FreeMoney Bernie
FreeMoney Bernie's picture

to again have speculators with integrity like Rhett Butler

Tue, 04/26/2011 - 17:46 | Link to Comment Zero Govt
Zero Govt's picture

Chinese government authorities have stepped in to help the farmers and deal with the vegetable oversupply.

Er, right! What are these Govt officials (goof balls) going to do, eat the cabbage mountain morning to midnight?

Over-supply and under-supply are both market constants, that's one reason prices change as a constant. 

Truck in the Goon Squad of Govt and suddenly they politicise the event making a mountain out of a mole hill. So the Chinese Govt wants to shoot speculators for too low a price and Obummas US Marxist Govt wants to shoot 'em for high oil prices. Anyone thought of shooting the hot air filled windbags in politics instead?


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