Food Panic? That's So Over

The much-heralded food crisis of 2008 could soon be over.

While some commentators are saying its time to hoard food, they may be a tad late to the party.

Well, maybe more than a tad.

In June last year, I warned that a grain price spike was coming. In September, I said it would likely lead to pain at the casual dining chains.

But that was then, this is now.

Starting last year, historically tiny global wheat inventories -- which were forecast to end the growing season at 45 days supply last year, but eventually fell to as low as 37 days recently -- pushed prices for the grain up to more than $13 a bushel by March. That's a record high for hard red winter wheat.

And it's that sort of elevated price and skinny level of grain reserve that probably caused the panic and the ensuing media spotlight.

Free Rice, Don't Panic

But that's backward-looking, because it only reflects what happened as a result of last year's harvest.

The key for investors (unlike TV commentators) is to look forward. And there's the good news.

Traders -- and some notable agricultural experts -- are widely expecting the 2008-2009 growing season to provide a record harvest worldwide.

That's the reason prices for wheat futures have plummeted in recent weeks: The September contract now trades under $9 a bushel. That means it has retreated in value by more than a third from the record high just a few weeks ago, as traders expect increased supply of the grain as the harvest gets going in a few weeks.