Looks like It is Going to be More Expensive to Stay Stimulated

Interesting article in FT.com regarding sugar and coffee price inflation.  Notwithstanding the potential hit to your pocketbook to remain "stimulated" this is the most likely outcome of (a) government's, especially ours tossing fiat money in every direction and (b) the lack of investment in commodity production which will leave us short handed when the time comes that a real global recovery occurs.  If $50 to $60 oil is the "natural" price when 90% of the world is in moderate to deep recessions, need we think where prices are heading at the next global expansion?

I continue to believe, Uncle Ben Bernanke has an excellent chance of steering us into a nasty stagflation scenario; although this time around workers have far less wage power and won't be getting the cost of living increases they received 30 years ago.  Green shoots.... everywhere. No matter, recession or expansion - many thousands of new human beings come online each 24 hours.  Each is incremental competition for natural resources.

• Caffeine addicts face higher prices for their daily fix as the wholesale cost of both coffee and sugar rise sharply because of poor crops and robust demand.  “We are in a dangerous situation,” Andrea Illy, chief executive of Italy’s leading coffee ­company, told the Financial Times, warning that prices could “explode” due to supply shortages.
• Until recently, it was widely assumed that the global economic crisis would damp consumption and prices for coffee. However, that forecast proved wrong, since demand for coffee has remained high, even while consumers have moved from cafés to home drinking.
• International coffee prices last week hit a seven-month high, rising to $1.28 per pound, up 22 per cent from their December low, in New York trading. Meanwhile, the spot price of Colombian coffee – which commands a premium because it is sought by gourmets – jumped to almost $2.20 a pound, a 12-year high, due to supply constraints.
• Separately, sugar prices in New York and London rose last week to their highest in almost three years. White sugar prices rose above $450 a tonne, a 52 per cent gain from mid-December, as traders bet that India, the world’s largest consumer, will require hefty imports to compensate for the failure of the local crop.
• Swings in Indian sugar output, which move the country back and forth from exporter to importer, are a critical factor in global prices. Traders forecast that the country’s output will drop 40 per cent to about 15m tonnes in the 2008-09 season, well below the country’s consumption of about 23m tonnes a year.