Expect Your Groceries To Get A Lot More Expensive

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Two days ago, the U.S. Labor Department reported that a key measure of inflation, the Consumer Price Index (CPI), increased 1.4% in 2020, the smallest yearly gain since 2015. For comparison purposes, in 2019, the CPI rose 2.3%, while the 10-year average is estimated at 1.7%. But these data points are misleading without having the full picture. For example, the CPI for December rose 0.4%, the largest gain since August.

For some perspective, lets look at the agriculture products. Agricultural crops, including wheat and corn, are deeply affected by the price determination process. The prices of these two agricultural commodities are set by supply and demand. Supply determines the amount of production; demand determines the level of consumption. There are also other external factors, such as government policy.

In 2020, 20% of all US dollars ever printed occurred last year. This resulted in a devaluing of the US dollar and increase in agriculture products. Cotton was up 18%, Soybeans were up 50%, Wheat was up 18% and Corn was up 35%, the highest price has been since 2013.

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Corn is one of the world’s most versatile grains. Corn has been in the ground for millions of years, and has been a staple food for us for more than three thousand years. It has many uses and can be found almost anywhere. We use corn syrup for our cooking, and corn flakes for our breads and cereals. The corn itself serves as livestock feed, and it is used for animal feed in the dairy industry.

As I mentioned, Corn was up 35%, the highest price has been since 2013 and there is more room for price to move higher as the chart suggest price can move up to the monthly supply at $660.

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This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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neoxian leofiance commodities usdollar leofinance
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15 comments
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Some agricultural commodities will explode, they have been at the bottom of the cycle for way too long.
For curious investors you can have a look at FARM, LND and AGRO.

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@hykss is FARM, LND and AGRO ETFs? As long as the US dollar continues to go down, commodities will do well.

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(Edited)

None of these are ETF. But companies with broad range agricultural activities.
I’m invested in LND amongst these.
ETFs have been my first steps in investment. But most of them are flawed and not tracking investors best interest anymore. So I stepped out and chose differently my stocks ;)

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Cost has gone up astronomically worldwide by stats being released.

Living in South Africa inflation is hitting highs never seen, many have no income the end result is going to be devastating.

Thanks for highlighting, something everyone should be concerned about and keeping an eye on what is happening while the world is in lock-down mode.

@tipu curate

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Wonder if that will apply here in EU aswell, since we have such surplus of agriculture and we protect our farms with tariffs.

The thing that becoming increasingly expensive here where I live is electricity. Our actually not the electricity, the fee to be connected to the grid has become 100% more expensive in under 10 years.

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I believe EU gets a lot of the natural gas from Russia right? Natural gas and oil is traded in US dollars, so as USD loses value, energy cost will increase.

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It’s interesting to read this post and understand how everything is connected. I wonder if they saw this coming in Venezuela before hyperinflation hit.

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