Exports surged 19% year-on-year in the second quarter of 2008 and helped boost GDP growth to 3.3%. Though many think the US has become more competitive, higher exports actually reflect the higher prices of exported food and mineral fuels. Food and beverages accounted for 8.4% of the total goods exports, but because of the increase in prices during the second quarter they made up a staggering 18% of total export growth. Similarly, industrial products were driven up by the increase in refined fuel products.

Snapshot asks, if the commodity bubble has burst and rising commodity prices are driving GDP, what does that imply for third quarter growth?

UBS - Global Economic Perspectives
Wall Street Journal - U.S. Revises GDP Growth Higher

High commodity prices masked weak economic fundamentals in many commodity exporting countries. Now the risk of a global slowdown is higher, reducing demand for commodities and hurting export revenues in commodity rich countries. Commodity rich Brazil, Russia, and Australia have been hurt by the falling prices while less demand in India and China also indicates there will be a world recession.

Snapshot asks, are we watching a commodity bubble pop or do falling commodity prices indicate a forthcoming world recession?

BNP Paribas - Market Watch
Financial Times - Falling Brics
BullionVault - Demand Destruction & Central Bankers

Rioting has broken out in Egypt, Senegal, Ivory Coast, Cameroon, and Ethiopia and 33 more countries around the world may face instability due to rising food prices. During IMF/World Bank meetings last week, leaders cited the U.S. demand for bio fuels as a major reason for high grain prices. Throughout the weeklong meetings, World Bank President Robert Zoellick repeated the need for more food assistance to poor countries. To date, the United Nations has only received half of the $500 million it said it needed to sustain assistance through the World Food Program.

Snapshot asks, will cutting the U.S. demand for bio fuels sufficiently curb inflation in food prices?

World Bank - Rising food prices: policy options and World Bank Response
Wall Street Journal - Food Inflation, Riots Spark Worries for World Leaders
European Bank for Reconstruction and Development - Fighting Food Inflation through Sustainable Investment
Time - The Clean Energy Scam

The price of rice has increased dramatically in the first two months of 2008 according to the Food and Agriculture Organization of the United Nations. Gloria Macapagal Arroyo, the president of the Philippines, recently reached an agreement with Vietnam to guarantee a steady rice supply. Other Asian leaders are also trying to secure their imports. For much of Asia, industrialization has taken precedent over investment in agriculture causing shortfalls in rice production. Factories have taken precedent over rice patties and investment in machinery over research in agriculture.

Snapshot asks, will the rush to industrialize continue to push rice prices higher?

Soaring commodity prices and relative stability during global market turmoil has made Brazil the largest share of the MSCI Emerging Market Index, edging China out with a 14.95 per cent share (China holds 14.15 per cent share). While the Chinese stock markets have corrected, the Brazilian market, led by juggernauts Vale and Petrobras, remains high.

Snapshot asks, will commodity prices fall and cause a correction in Brazil's market or will they stay high enabling Brazil to sustain its current rise?