Wednesday, March 24, 2021

Rabobank Does a Pale Imitation Of The Pharaoh/Joseph/Commodities Story

From Rabobank via ZeroHedge:

On The Verge Of A Global Crisis: One Bank Warns Of A "Biblical" Surge In Food Prices 

Biblical, Lean, and Mean: 'Dreams' of an agri-commodity super-cycle

Then Pharaoh said to Joseph: “Behold, in my dream I stood on the bank of the river. Suddenly seven cows came up out of the river, fine looking and fat; and they fed in the meadow. Then behold, seven other cows came up after them, poor and very ugly and gaunt, such ugliness as I have never seen in all the land of Egypt. And the gaunt and ugly cows ate up the first seven, the fat cows. When they had eaten them up, no one would have known that they had eaten them, for they were just as ugly as at the beginning. So I awoke.”

- Genesis 41:17-21


  • Key feed and food prices have been pulled to 9-month and 7-year highs 

  • We explore the ‘dream’ of Biblical scarcity; its origins and impacts; and draw comparisons with Joseph, the trader and central planner who avoided starvation for ancient Egypt

  • One point is clear: global food insecurity falls heaviest on lower income, importing nations, who spend a far greater share of their income on food than the richer ones

  • The Fed would play an ironic role in this process even as it embraces fighting poverty and inequality alongside inflation

  • This could exacerbate (geo)political risk – potentially even regarding institutional architecture

Our Base Commodity Call

At time of writing, our forecasts for three of the world’s key agri commodities, soybeans, corn, and wheat are as follows:


The First Big Commodity Call

In the Bible, Joseph interpreted Pharaoh’s dream as meaning great abundance for seven years would be followed by an equal famine. He was then entrusted with ensuring Egypt’s storehouses were full of grain so the country could survive – which he, and it, did.

In short, Joseph made the first agri commodity cycle call, where survival came before profits. Today we have seed technology, automated agriculture, and global markets. Yet we still have lean and fat years for reasons meteorological, logistical, political, and geopolitical. This report will try to do several things:....


So why dismiss it as weakly derivative?

He's got nothing on this, a piece unique in the Financial Times archives:

An Old-school Discussion of Commodity Storage and Financialization

Explaining the commodity warehouse trade with scripture
This is Joseph. He is a well known commodity forecaster.
This is Pharaoh:
Pharaoh is worried about future scarcity of commodities because he’s been listening to Joseph’s scary dream-based forecasts.

This is despite the fact that there is a helluva lot of wheat around today....MORE much more