Ag Commodities And The Coming Inflation
ongtime readers will recall that we’ve had several conversations here regarding the impact that the Fed’s quantitative easing policy is having on the costs of everyday food items. Soaring prices of agricultural commodities are going to continue to have a devastating effect on the purchasing power of average Americans and consumers around the globe. Since prices have now recovered some from the selloffs after the Japanese earthquake and tsunami and since there is no end in sight to QE, I thought it was time to once again take a look at out favorite commodities and assess where their prices may be headed over the spring and summer.
Let’s start with the grains because rising grain prices cause all sorts of inflation. Not only are grains the raw input to countless consumer goods, grains are also the primary foodstuff for cattle ranchers and hog finishers as they prepare their herds for slaughter. Let’s start with wheat, which is being influenced not just by the falling dollar. Price is also feeling the impact of the ongoing drought in the “winter wheat zone” of the high plains of Kansas, Oklahoma and Texas.
Now take a look at the chart. Long-term support held at $7.50 and wheat looks almost certain to catapult higher very soon.