We're in the thirteenth month of transitory CPI:
source: tradingeconomics.com
From AgWeb, March 6 (evening):
Markets Make Historic Open Sunday as Wheat Tops $13, Soybeans Soar Past $17, Corn Closes in on $8
Commodity markets made historic moves Sunday night as crude oil topped $130 a barrel, hitting the highest price in 13 years, and wheat topped a 14-year high trading above $13. March soybeans soared past the $17 mark, with March corn just 20 cents from $8. And as the Ukraine-Russia crisis continues, the bull run may not be over yet, as food and fuel inflation fears are also heating up.
“11 days ago when this conflict and war started in Ukraine, crude oil was in a range of $90 to $95,” says Tommy Grisafi of Advance Trading. “We were trading there for over two weeks. This conflict started, and we've done nothing but move up. There's a lot of chatter out in the markets about inflation, you'd have to wonder do we start to bring up the word hyperinflation.”
The volatility in the commodity markets was on full display last week, with wheat making new highs. And the theme continued Sunday night as Chicago wheat futures rose more than 7% with prices climbing to a 14-year high over concerns about global supplies amid an escalating Russia-Ukraine war.
“Wheat had its largest move in history last week,” says Grisafi. “And as we trade tonight, wheat has new extended limits. May wheat is trading up 85 cents close to $13.”
Kansas City wheat and Minneapolis wheat both traded higher Sunday night, with both corn and soybeans also climbing more than 20 cents.
“May beans almost have a $17 in front of them,” he adds. “November soybeans are trading at a phenomenal price, historically. But we'll see how that ends up.”
Wheat could have even higher limits this week. While commodity prices continue the bull-run, Grisafi points out other commodities are in uncharted territory with gold hitting $2,000 per ounce overnight. And as crude and gold surged, Dow Jones futures fell.
“What's this mean to you? Well, if you're a farmer, you're probably rooting for high prices unless you sold it a long time ago. If you're growing crops, you're probably loving high prices except for one thing. How are you going to get fertilizer moving forward,” asks Grisafi.
Food and Fuel Inflation Fears....
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And during the last fourteen months this has been our guiding light:We first posted this research in December 2020 after the UN's FAO Food Price Index had printed higher for six consecutive months. The correlation with coming CPI prices apparently held.We reposted in September 2021.
Reminder: "St. Louis Fed: Food Prices As An Indicator Of Future Inflation"
A repost from December 29, 2020:
St. Louis Fed: Food Prices As An Indicator Of Future Inflation
An interesting commentary, especially in light of the generations of Econ profs admonishing against putting much weight on headline inflation, as food and energy prices are volatile and should be stripped out to reveal core CPI and PPI trends.
From the Federal Reserve Bank of St. Louis, January 1, 2002:Predicting Inflation: Food For Thought
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