Grain Prices Could Keep Emerging-Market Inflation Alive (DE, POT, MOS, CORN)

Tim Seymour:  Between corn and rice, food prices seem to be building up strength again. This could challenge the thesis that inflation in emerging markets has been defeated. 

Thailand is threatening to keep ratcheting up its rice export prices — currently in the range of $550 to $570 per ton — as the government tries to curry favor with rural farmers.

A bowl of rice is already 22% more expensive than it was last year, and supply in Thailand and elsewhere remains relatively tight.

Meanwhile, corn prices keep edging upward as stockpiles shrink. The commodity gurus at Standard Chartered say corn could bring $7.75 a bushel by early 2012 — versus $7.28 today — as more of the grain is used for ethanol or shipped overseas.

Farm equipment companies like Deere (NYSE:DE) are raising their targets on corn prices by 4% to 5% because of the drought in Texas.

Details like this are the bogeyman in the global economy. Food prices always threaten to spike, as they did in 2008 and then last winter.

Higher rice costs will crush Asia, especially big importers like Indonesia.

In the meantime, this is a very strong endorsement for fertilizer names like Potash Corp. of Saskatchewan, Inc. (NYSE:POT), Mosaic Co. (NYSE:MOS) and Israel Chemicals Ltd. (ISCHY.PK), not to mention pure grain plays like the Teucrium Corn ETF (NYSE:CORN):

Written By Tim Seymour From Emerging Money

Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.

About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.

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