Recent price moves in wheat

SilverStreet comment | August 9 2010

The price of wheat has soared recently and is now 40% above the last 12 month average. This increase has arisen because of droughts in the Black Sea region and exceptionally high rainfall in Canada.

Unlike the price spikes in 2008, global inventories of wheat are significant at around 30m tonnes and this should approximately cover the Black Sea shortfall. Thereafter prices will be very sensitive to any other shortages arising globally. The Canadian wheat crop is expected to be around 17% lower than last year. Additionally there are potential problems with locust plagues facing wheat farmers in Western Australia.

We expect wheat prices to give up some of their recent gains in the near term as inventories are sold down. Thereafter we expect wheat prices to trend upwards over the next 9-12 months given the tight nature of global supplies.

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Africa's Growth Story

McKinsey | June 2010

A series of articles from McKinsey focused on Africa. Agricultural real GDP growth has been 12% per annum in Africa in recent years.

"The key reasons behind this growth surge included government action to end armed conflicts, improve macroeconomic conditions, and undertake microeconomic reforms to create a better business climate. Next, Africa's economies grew healthier as governments reduced the average inflation rate from 22 percent in the 1990s to 8 percent after 2000. They trimmed their foreign debt by one-quarter and shrunk their budget deficits by two-thirds. Finally, African governments increasingly adopted policies to energize markets. They privatized state-owned enterprises, increased the openness of trade, lowered corporate taxes, strengthened regulatory and legal systems, and provided critical physical and social infrastructure."

"The region has the resources both to feed its growing population and to meet the world's burgeoning demand for food and other agricultural products. In sub-Saharan Africa, demand for food is expected to reach $100 billion by 2015, double the levels in 2000. Moving forward,
appropriate investments in agricultural skills and infrastructure-for example, irrigation-could prompt a green revolution in sub-Saharan Africa."

"While more than one-quarter of the world's arable land lies in this continent, it generates only 10 percent of global agricultural output."

Link to articles 

Sir Bob warns pensions may miss out on Africa

Financial Times | June 20 2010

Sir Bob Geldof has warned UK pension funds they are missing out on the “last great investment opportunity left” by not placing money in Africa. Sir Bob, who has campaigned on Africa for the past 25 years, made the remarks at an event organised by CDC, a government backed institution that makes private equity investments in sub-Saharan Africa.

He said investors had five to 10 years left to grab the best opportunities, many of which were being snapped up by Chinese investors. Asked specifically about UK pension funds, he said they were “behind the curve. There are pension funds around the world that have got stuck into this.....

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SilverStreet Fund Focuses on Agriculture in Africa

Institutional Investor | June 8, 2010 | Loch Adamson 

Gary Vaughan-Smith is no slouch at growing assets. As head of ABN Amro Asset Management’s alternative investment group, he boosted assets from less than $50 million to more than $5 billion in just five years. Now he wants to apply the same skill to growing crops. As a founding partner of London-based SilverStreet Capital, he aims to buy up farms in Africa; raise productivity by using sustainable agriculture, such as no-till farming; and sell the produce domestically. He also wants to teach local farmers better techniques....

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Pension funds seek out agricultural assets

Global Pensions | 24 Nov 2009 | 12:51 Caroline Allen

Pension funds are seeking out agricultural and commodity-related assets that offer diversification from traditional asset classes and superior returns to listed equities.

Gary Vaughan-Smith, founding partner at SilverStreet Capital said there was growing interest among European pension funds in private equity-type structures that offer steady income to investors, as well as a long term appreciating asset.

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