Beyond Mathematical Odds IX - The critical mass

And nature's wrath

This post belong to a series, that I advise you to read it. Part I, II, III, IV, V, VI, VII, VIII as important is this one.

We are slowly verging in Critical mass territory.

U.S. Egg Prices Rise as Deadly Bird Flu Strikes Ahead of Easter

Avian influenza is threatening to pinch supplies right before the egg-centric holiday

Highly pathogenic avian influenza is back in the U.S., forcing farmers to cull flocks and pushing up egg prices at a time of rampant food inflation.

The deadly virus has been hitting poultry operations along the East Coast and Midwest, including top producer Iowa, where a farm was recently forced to cull nearly a million birds.

The emergence of bird flu is adding to a tight supply situation. Egg-laying chicken numbers were already on the decline, Stephens analyst Ben Bienvenu said in a phone interview. “When you layer that on top of that what’s going on with avian influenza, and the precedent of 2015, the impact on the market could be material,” he said.

When it rains, it pours. For the entire of the pandemic, the US already had a decline on egg production, now it is faced with a massive disruption, that I have been covering for over a year now, and I wrote about it many times, this would come to bite the entire planet ass. There is no easy way out of this one, I am afraid.

Besides leaving away from people, in the middle of nowhere, and getting your own chicken. I advise you to buy egg powder, and stock some, as a hedge against future inflation. Wish I could say this is the only problem in the animal protein world.

But the pig sector in Ireland is on the verge of losing a third of its producers, already affected by the pandemic, now being hammer down because of African Swine Fever, and the inflation on feed costs, and now vitamins.

Alas, we inch ever close to an enormous disaster, high price on grains, and little animal protein is a receipt for societal disaster. Specially after a pandemic. As I said to a few people, if you use historical cycle analysis, it literally goes down to us being hit by every historical trend. At once. Inside 3 years.

There is only so much Zero Chance Event’s math can account for.

Lake Powell could stop producing energy in 2023 as water levels plunge

• Major reservoirs like Lake Powell and Lake Mead, which store water from the Colorado River, are experiencing a major decline in water levels thanks to a megadrought

• Other large bodies of water in the U.S. West have also hit record lows this year and triggered concern about power generation, including Lake Oroville in California

This is not new. The drought in the US has been impacting the future yield of many crops (specially…wheat, as I covered before in this series of posts), and now it might impact energy, driving the prices further.

As mentioned multiple times, governments on all levels won’t have many choices, and will intervene in said markets when time is critical, otherwise they risk damaging local economies which are beyond strained by now.

Greece to Provide $1.2 Billion More to Tackle Energy Price Spike

Greece will provide an extra 1.1 billion euros ($1.2 billion) in support for households and businesses over the next three months to tackle a spike in energy prices, on top of the 2.6 billion euros already spent since September. 

If you have been following this series, nothing much to add, countries will intervene in their energy markets, and prices otherwise they risk collapsing their own economies, and setting off systemic contagion to the entire planet. Turkey plans to set limits on how many companies can charge.

Energy traders now want a bailout on the backs of taxpayers, I say punish them, future markets is a scam. (Well, everything these days is a fucking scam, from vaccines to everything else…)

Lebanon is running out of time to avert starvation

• The Ukraine war has cut wheat supplies to an already impoverished country, but there are solutions on the horizon

The conflict has set off a food security problem for many nations across the Middle East and North Africa – a region that relies on the Black Sea wheat-growing region as their bread basket – but Lebanon's situation is uniquely precarious. Its severe lack of storage capacity combined with its economic state of hyperinflation is to blame. The situation is dire, and in the absence of immediate financial assistance, a food system collapse could happen in a matter of weeks or even days.

Lebanon needs to import about 50,000 metric tonnes of wheat each month to cover the nation's demand for bread, and the government had relied on Ukraine to provide about two thirds of that wheat supply, amounting to more than 400,000 metric tonnes per year. Lebanon used to be able to store four months' worth of wheat reserves, but the August 2020 Beirut Port explosion destroyed the country's primary grain storage silos, removing 120,000 tonnes of storage capacity that has yet to be restored to this day.

Lebanon situation is even worse than Egypt (below), and it will have the similar effects, I would keep an eye there, as a thermometer, and a marker to analyze cascade dynamics, and how the region will tackle the lack of food, and massive inflation because of low supply.

About the port, I left something in one of my earlier posts ;).

Egypt Moves to Lock in Local Wheat Purchases as Global Prices Surge

• Farmers will have to sell a quota of their wheat to government

• North African nation is hit by soaring commodities prices

Egypt is offering incentives to farmers to produce wheat and setting an output quota for subsidies as the country rushes to safeguard supplies amid the war in Ukraine.

Farmers must deliver a minimum ratio to the government to participate in the country’s bread-subsidy program, according to a document seen by Bloomberg. They won’t be able to sell the rest of their crop outside the official procurement system without a license, it said.

Between starting writing this post, and today, prices without state subsidies went up 25%. As previously outline merely weeks ago, starts to unfold before your very eyes, and governments retroactively try to fix the problem by any means necessary. The mass starvation the current events will set off, will cause a huge influx to a already strained system in the European Union, crime rates, small number of terror attacks, inflation and everything else will start slowly going up, as nation states start losing their grasp, and the illusion of power.

India plans to do the same, and plant high quality at a much larger s scale. The bigger the crisis, and dynamics, the bigger the opportunity, if hedge correctly. I hope they achieve their goal, but 2-3 years down the line would find ironic, if nothing else happens, the wheat market crashes because of too much wheat in the world.

On an interest side note, Russia is now limiting the export of grains even for its soviet allies. Perhaps the sanctions hurt them more than expect, or they know something (via the Chinese) most of us don’t.

Logistics companies warn clients lockdown in Shenzhen will impact port activity

Seko’s COVID-19 advisory note on Sunday explained that because of the weeklong lockdown in Shenzhen, “no cargo will be able to load in Yantian … and vessels most likely will omit the port.”

Trucking restrictions for vehicles traveling in and out of Shenzhen remain in effect and could slow the supply chain, since no cargo from outside the restricted area can enter.

China’s “zero-COVID” strategy was previously used in Yantian in 2021, when it was closed for a month between May and June. The move created havoc on the supply chain, and the clog took months to dissolve.

Container Rates Climb On China Lockdowns

I have covered this for weeks, almost since I created my Substack, and very few people paid attention, but now, you can track and watch it live. Every single time the Chinese government implement its (hybrid war) 0 Covid policy, it has massive, global, ripple effects in that specific markets.

I wonder how many of you can propose or think what are the effects when China does this. It is rather simple.

1. Affecting shipping rates, number of available containers in and out of the market

2. Controlling a decent portion of the global logistics flux

3. Timing it well enough to create shortages and strain competing markets

4. When prices spikes because of said markets, you sell your massive stock (they just did with 20.000 tons of aluminum)

5. Last, and my favorite, you create a sort of push, and pull, and disrupt the entire logistical chain in your biggest buyer, and adversary (the US)

Among other, more complex angles. The shipping queues are already growing by the day. Don’t believe a word Xi says, he doesn’t want the disruption to end that fast, it always last the same amount of time.

The ripple effects of this moment will be felt in April, pretty hard in the American economy, and marginally in the European.

Italy is not alone. Algeria banning of exports of all consumer products that Algeria imports, such as sugar, pasta, oil, semolina and all wheat derivatives". Argentina government warns beef sector to help cut inflation or risk export bans. And among the itens banned by Russia, Vacuum Tubes are one.

This leaves tube buyers with few alternatives. While vacuum tubes are still being manufactured in other countries including China, the Czech Republic (KR Audio Electronics), and Slovakia (JJ Electronic), demand has outstripped production.

The Global Fight Over Chips Is About to Get Even Worse

Sanctions are causing a shortage of microchips in Russia. Meanwhile, the U.S. and Europe are spending billions in a race with China that could easily backfire.

Behind closed doors, though, some people in the industry are getting increasingly concerned that the push to make the West more competitive might backfire.

Their worry is not only that the money will be too little, too late, but the political strings attached to the aid may complicate global supply chains further. Different parts of the planet will compete to secure supplies while championing domestic plants that can’t yet fill the void.

It’s not possible to turn back the clock,” TSMC founder Morris Chang told a Taiwanese tech association in October. “If you want to re-establish a complete semiconductor supply chain in the United States, you will not find it to be a possible task, even after you spend hundreds of billions of dollars.”

Whatever type of chips end up being produced, industry insiders expect the U.S. and Europe will always be dependent on Asia for their materials, not least because of the global intricacies of supplies.

TSMC Chairman Mark Liu highlighted the connectivity in December, saying that some semiconductor chemicals required by Intel are shipped to the U.S. by Taiwanese suppliers. In other words, even American-made products rely on the outside world.

You know what I love ? Common sense from sensible people, even though it might have a bit of self-interest behind it. As time goes by, you will come to understand that I am a natural contrarian, I never take the word of anyone at face value, specially experts.

And again, “experts”, and the “exceptional” types are wrong, and the insiders, people with contacts in the industry, and people like me, right. There is no easy way for both America, and Europe to produce chips at a competitive price, and using only closed supply chain, at least in the short timeframe they estimate.

There is this distant dream that America, or Europe would be able to source everything inside their territories without any political opposition (laughable at best), or even better, no outside hybrid disruption. And we can clearly see how well the EU, and the USA, Canada plays this game, by being massively disrupted by China for 2 years, and Russia for 2 decades.

Also, if you want my rare earth minerals, but I am not getting any benefit besides a few pity dollars, you know what I would do ? Nationalize my resources. You know what China would do ? The same, behind your back, because they would have a monopoly.

And if things were not hard enough for the semiconductor business, yesterday an earthquake hit Japan pretty hard, it affected some of their coal plants, which made Japan go to the market to buy spot (2 days delivery, usually more expensive) LNG (gas), which will affect the prices of an already stretched and inflated market. But the reason I mention semiconductors ?

Renesas suspends semiconductor output at 3 plants in Japan after earthquake.

Renesas Electronics Corp., a key maker of semiconductors for the global automotive industry, has suspended operations at three plants in Japan after a major earthquake hit the country’s northeast, triggering a tsunami, causing blackouts and snarling transportation

BMW and Volkswagen are closing factories across Europe due to critical parts shortages due to the Ukraine war. There is no easy day for the auto industry, it is one disruption after another, magnesium, steel, semiconductors, energy costs. This will have massive economic impacts.

GAINS

Cyberattack on one of the biggest milk producers in New England. Possible shortage of dairy in England because of the war. Floods wiped out livestock in Mid North Coast in Australia.

Inside The Creatine Shortage Affecting Consumers And Supplement Brands

creatine is in short supply and it’s affecting consumers and supplement companies. Popular brands are either out of the good stuff altogether or their prices have nearly doubled in the last few months. 

For creatine products in particular, the pandemic has slowly but surely created a drastic shortage. As a result, the cost of creatine has steadily climbed — with no end in sight.

“As it stands, the shortage remains in full effect, and we anticipate creatine to be harder to purchase throughout 2022,” says Clea Murphy, supply chain manager for Nutra Holdings LLC, a sports nutrition platform that oversees several prominent supplement brands such as Jacked Factory and Transparent Labs.

Well, shit just got real, meat becoming ultra expensive, and even the cheap, preferred cuts being threatened by two hidden pandemics, dairy getting expensive, and now creatine prices raising like the stock market, with no end in side.

Creatine not only used for “bros”, or people who exercise, it has many benefits, including cognitive ones. So if you use Creatine for any goal, being getting lean mass, energy, or all its other benefits, I highly advise you to stock 2 pounds, because if in 6 months it trippled in price, I expect it to get another good 30% more expensive by the year’s end. Too many disruptions all around.

(leave some creatine for me horders)

CP Issues 72-Hour Lockout Notice to TCRC-T&E

Canadian Pacific (CP) late on March 16 issued a 72-hour notice to the Teamsters Canada Rail Conference (TCRC)-Train & Engine of its plan to lock out employees on March 20, 2022 if the union leadership and the Class I railroad are unable to come to a negotiated settlement or agree to binding arbitration.

I have covered this for a couple of weeks now, and you can go to the last two posts, and understand how critical this strike is at this moment. It will affect the American supply of fertilizer, the output inside the US can’t keep up, and the US can’t produce the amount of potash (potassium) Canada sells, a strike of merely a week out have disproportional effects both on price, yields, and everything in between, you better keep an eye on this trend.

Truckers' strike in Spain disrupts food industry

A truck drivers' strike for better working conditions has caused disruption at some supermarkets and certain industries in Spain, with dairy food producers complaining on Thursday of some supply shortages as they received less milk.

"Diesel is the straw that broke the camel's back," said Jose Hernandez, a representative for the Platform and a truck driver who lost his job on March 7. His company stopped operating because the fees it earned didn't cover costs.

Soaring energy costs, exacerbated by Russia's invasion of Ukraine, have compounded general price increases, threatening to slow down the post-pandemic economic recovery and generating social discontent in many countries.

Because as I said, this will be a global trend, for a multitude of reasons, and they tend to happen at the worst possible time. I expect more truckers strike, as diesel costs rise in almost every country, and raises both inflation, and can’t cover the operating costs.

Governments should stop being reactive, and start using their own scientists specialized in cascade dynamics, adopt a better risk mitigating tool, otherwise they will just keep applying band-aids, and feeding the cascade.

Every superficial intervention just add more pressure down the cascade and the road. At some point everything starts to crack, and truckers have been one of the most explored, and necessary workers in the last 27 months.

As the impact of the Russia Ukraine are felt globally, I expect countries to adopt more instances of Resource Nationalism, and underhanded threats in regards to natural resources.

The impacts of 0 Covid in China will start being felt next month, and they will intensify most of what is beinf felt right now. Any other event like the Russia Ukraine war, and the system will crack.

I also don’t expect Nature to be very nice, and helpful with our goals, and global stability. Just a gut feeling I had for 9 months.

For your awareness, it is still March, and the Ides goes on.

If you enjoy or take value from my independent, interdisciplinary analysis, consider becoming a free or paying subscriber, my work is fully support by you. Sharing also helps me tremendously. I truly appreciate all supporters

.