The “Flu” You’re Not Hearing About

April 7, 2022

When Melinda Gates made her now-(in)famous comment on the economic impact of COVID, she conveniently danced around the fact that it was global governments’ responses to it, i.e. the lockdowns, that were wreaking havoc on the global economy — NOT the actual virus.

Well at the worst possible time there’s a new virus spreading that will directly impact the supply (and prices) of the food at your local grocery.

Don’t laugh. It’s just one more thing the typical consumer (and politician) never thinks about.

If One Bird is Sick — They’re All Sick

On February 8, a case of highly pathogenic avian influenza (HPAI) was confirmed in a domestic poultry flock. By March 9, after just the first month, the virus had spread and 2.8 million birds (chickens and turkeys) had died.

By Friday March 18, an outbreak of the bird flu at an Iowa egg-laying farm resulted in 5.3 million chickens being culled at that facility alone. Further action had to be taken in Kansas and South Dakota. (Much like China’s zero-COVID policy, if one case of bird flu is confirmed, the entire flock has to be destroyed.)

In just two months (February and March 2022) the death toll from this outbreak has reached 12.6 million birds.

The last time the US experienced such a devastating outbreak of bird flu was back in 2015 resulting in the deaths of 50 million turkeys and egg-laying chickens. According to the USDA, between May and December 2015, benchmark egg prices soared 61% higher than prices the previous year.

There is a bit of good news according to the CDC:

Human infections with HPAI A(H5) bird flu viruses are rare but can occur, usually after close contact with infected birds. No human infections with highly pathogenic avian influenza A viruses have been detected to date in the United States.

But the bad news is clear… At a time when food prices are soaring thanks to supply chain issues, this latest development will be like throwing gas on the inflation fire.

Count Mother Nature In

And if things couldn’t get any worse, Mother Nature has decided to drop in on the party.

In March, the farming website AgWeb.com reported that a “worsening drought in the southern U.S. Plains is threatening the region’s winter wheat crop just as the Russian invasion of Ukraine dents global supplies.” 

Wheat isn’t just a grain — it’s a staple of our civilization. Evidence exists that wheat was grown as a crop as far back as 10,000 BC. And today it is the second most consumed grain in the world.

Winter wheat is planted in the fall, lies dormant throughout the winter and is harvested in June and July. There has been virtually no measurable precipitation in the region since last October. And now, facing the driest conditions since 2018, the weather is threatening the survival of entire crops. 

Wheat prices have skyrocketed 189% since the lockdowns in 2020. Ordinarily, wheat farmers will sell up to half their crops on a forward basis to lock in prices, few are doing so this year because they don’t know if they’ll have a crop to deliver. 

Wheat Futures

Source: Barchart.com

And while drought is threatening crops in the US Plains, China is having the opposite problem. Severe flooding is damaging its wheat crops. China has indicated it will need to add to the global demand to meet its grain needs. 

With both Ukraine and Russia, who together fill almost 25% of the world’s grain demands, on the bench due to war or sanctions, India, a relatively minor player in the grain-export game, has seen foreign demand triple compared to last year. Will they be able to meet demand?

We’ll have to see.

So a number of factors are now threatening the supply and price of food around the world. And these factors are being exacerbated by the broken supply chain. There is no doubt food prices will be on the rise for the foreseeable future.  But those aren’t the only prices that will be rising dramatically. I’ll tell you about another market where prices have been soaring (and will continue to do so) in your next letter…

Make the trend your friend,

Bob Byrne
Editor, Streetlight Daily