Goldman Sachs Group, Inc. (GS), Morgan Stanley (MS): Can You Retire on Higher Milk Prices?

Jeremy Grantham of GMO sums up his scary thoughts of where we’re headed:

We are five years into a severe global food crisis that is very unlikely to go away. It will threaten poor countries with increased malnutrition and starvation and even collapse. Resource squabbles and waves of food-induced migration will threaten global stability and global growth. This threat is badly underestimated by almost everybody.

On the other hand, there are others, like Savvas Savouri of Toscafund, who see a brighter future: “From more intensive dairy and cereal farming to improvements in distribution and processing, the world can and will produce more food from less arable land, smaller dairy herds, lower water requirements, and using less rural labour.”

The bottom of the milk bottle
The future of commodities depends on population growth, climate, efficiency, and innovation. A 60% jump in milk prices shows that, at least in the short term, shocks in supply won’t be mitigated by any new technologically advanced milking. And as poor weather patterns hurt production, the success of the next season isn’t a given. With abundance or famine seemingly decided by a flip of a coin, commodities may offer a good hedge, but they’re never a sure bet for a long-term investment.

The article Can You Retire on Higher Milk Prices? originally appeared on Fool.com.

Fool contributor Dan Newman has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican Grill and Goldman Sachs. The Motley Fool owns shares of Chipotle Mexican Grill and Dean Foods Company.

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