Look Around: There's Major Commodity Inflation Happening Everywhere

Since the end of August, commodity prices have surged supported by high real demand in developing economies like China and India as well as investors searching for yield in a weak equities market. The result has seen prices of many major commodities instrumental in the construction and production of certain goods and services surge. Those prices could be set to hit the profits of firms, or, be passed onto consumers already experiencing a deleveraging economy and declining home prices. That could, potentially, lead to stagflation. There are some notable exceptions from this list, like crude oil and orange juice, but nevertheless the shared rise of those listed is of significant interest. Where is there not inflation? Your house.

Could be gonna get bad soon....

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While I appreciate your point, I'm not sure of the value of the information in such a short duration chart.
Is there a site you can recommend with longer range charts?

I also view the commodity market as one that is very (overly) influenced by info/dis-info groups to affect price/perceived value. Coffee is a recent example. The movie 'Trading Places' also comes to mind.

All it would take is a "huge copper/gold/name-it vein discovered" headline, or even less, and prices drop.
Real Property will still have value after this shakeout.

This is very concerning information really. This means that the trickle down effect will start happening in the next quarter or so. We will start to see prices on our every day items increase due to the increase in commodity prices. For those already on a tight budget this is not good information.

reply to post by Dogdish


I agree that the metal prices could fluctuate based on new veins being found....

the ones that concern me the most is the Food prices...they can't go out and find previously undiscovered fields planted with the crops...

and my concerns are based upon all the "attacks" whether natural or not food "stuffs" may be coming to a crunch time...

i read a report last week how that even the US has surplus deficits....inventory said we had sooo much more than what we really do.... wonder where it all went...

reply to post by SpaDe_


Tell me about it...we been keeping close to 3 months of food stored...just in the advent... might need to take that up to more....


yeah it's cheap food in most cases....but it works in a pinch..

Many people knew this 3 yrs ago - I was lucky enough to have been studying these things at that time as I was adjusting my investments.

The agri commodities still have a long run up - this may seem like bad news in the US, but if you happen to live in a place like Africa or India - these price changes will result in the starvation of many people.

I feel that oil is being held down now - it is going to be used to drop a hammer on the global economy - I might be wrong, but oil is looking too cheap and its price has nothing to do with supply and demand, it is purely managed. I suspect when food prices and shortages are at there most critical we can expect a surge in energy prices.

There isn't much advice really now - people should just have a revolution - destroy the private money printers and make fractional reserve banking illegal - it is fraud. The other thing necessary is to make short selling illegal, and insist that all futures contracts must be delivered - that will get rid of the speculation that is going to cause a wave of starvation across the 3rd world.

finviz.com...

here is the best i could find...about a year ago till present


there...



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Originally posted by Amagnon
I feel that oil is being held down now - it is going to be used to drop a hammer on the global economy - I might be wrong, but oil is looking too cheap and its price has nothing to do with supply and demand, it is purely managed. I suspect when food prices and shortages are at there most critical we can expect a surge in energy prices.

Well feeling some way doesn't explain much, it just shows that you haven't a reasonable answer to fill in the gaps of your knowledge.

The cheap oil has everything to do with supply and demand. The credit crunch caused the recession, which dropped demand. This meant that prices would come down. They did. It's not rocket science. They've gone up over the last year and a half because people adjusted their spending's to include for necessities like fuel, rather than needless consumer wants. Everything else being the same, the price will continue to slowly rise until another bubble is burst, then the price will drop again, as demand goes even lower.

We'll eventually see triple digit prices per barrel again, but the current recession/depression is somewhat masking the "peak oil" crisis which is to come.

So just realize that it goes both ways: the bubbles effect demand for oil, and the dwindling supply of cheap oil effect the consumers purchasing power and resultant market data.

At the local feed store corn price has gone up over 30% this summer. It was $6.18 per hundred in May, yesterday was $9.97. Hoping my end is at the top of the "trickle down" pyramid, because if it goes up another 30% cows and will have to go to almost straight grass and save grain for chickens and our milk cow. Prices may fall here once harvest really gets going too...it has just barely started.

There got the graphs showing some of them...for the past year....see previous post...def...increase for food stuffs..


I have notice the increase also in feed prices...and we have a "hobby" farm

And older artticle...july i think


www.desmoinesregister.com...

Farmers are going to harvest less corn than forecast a month ago, the government says, and that’s going to mean tighter grain supplies and much higher grain prices. The Agriculture Department today lowered its estimate of the corn harvest by 2 percent to 13.2 billion bushels. That would still be a record, but the lower forecast comes at a time of growing global demand for grain. In a separate report, the department says that stocks as a percentage of this year’s production will be the lowest in 15 years. The USDA sees corn prices rising sharply as a result of the tighter supplies. The department raised its estimate of the average price growers will get for this year’s corn crop from $3.80 a bushel last month to $4.40 this month. While that’s good for corn farmers, the higher prices mean increased production costs for livestock and ethanol operations. The USDA estimates farmers nationally will harvest 162.5 bushels per acre,, down from last month’s estimate of 165 bushels. Iowa’s estimated yield didn’t change, but the USDA lowered its forecast of how many acres will be harvested in the state from 13.4 million to 13 million, reducing the state’s estimated production from 2.44 to 2.33 million bushels. Estimates of soybean production were raised both nationally and for Iowa as yield estimates increased. Total soybean production is estimated at 3.48 billion bushels nationally, up 1 percent from last month’s forecast. Iowa farmers are expected to harvest 527.8 million bushels, up from last month’s estimate of 486 million.

This article quotes a des-moines-register news story....that is no longer available at the source but they copied the content here...

tickerforum.org...

July 1, 2010 Commodity professionals were caught off guard Wednesday by a U.S. Department of Agriculture report showing 1 million fewer acres of corn planted this year than earlier projected, and almost 300 million fewer bushels of corn in storage. That sent corn prices up 29 cents per bushel, a penny off the maximum allowable range for the day, on the Chicago Board of Trade. December corn, which prices this year's crop, closed at $3.73 per bushel Wednesday after dipping below $3.35 per bushel earlier this week. The cash value of the anticipated Iowa corn crop this year rose by about $725 million in a day. The report, which cut the acreage for corn planting this year by 1 million from the 88 million projected on March 31, left traders using terms such as "game-changer" and "shocking." "If the USDA is right, then it turns out we don't have those big corn surpluses after all, and that leaves the market vulnerable to weather," said Don Roose, president of US Commodities in West Des Moines. Wet weather was already worrying Iowa farmers. Iowa Secretary of Agriculture Bill Northey said Wednesday that June rains "actually caused more damage than if we had heavy rains or flooding at planting time in April and May." "If you lose planting in April, you have time to make it up," Northey said. "But for a lot of producers who have lost corn and soybeans, it now is too late to replant." Roose noted widespread predictions of a La Nina weather phenomenon, which could bring hotter and drier late-summer weather than the Corn Belt has experienced in recent years. That may provide farmers with a long-awaited opportunity to sell their corn near the $4-per-bushel break-even point. Broker Tomm Pfitzenmaier of Summit Commodities in Des Moines said the Agriculture Department report "really caught the trade off guard. The trade was nearly unanimous in the expectation that the report would be bearish. So the trade was really caught leaning a little too much to the short side." Analyst Bryce Knorr of Farm Futures Magazine called the USDA report "shocking," adding that "the news basically suggests that new crop supplies could be up to a billion bushels smaller than previous estimates." The report also noted that demand for livestock feed could rise by as much as 40 percent this year. Roose said that because much of the stored corn from last year's crop has been shrunk by moisture, more corn will be needed to provide feed for cattle, hogs and poultry. Corn supplies have been fairly tight by historical standards, and the smaller-than-expected corn crop is likely to squeeze them further, USDA chief economist Joe Glauber said. "The demand side of this equation has been strong for the past several years," he said. "We've seen big increases in supply, record crops, yet we're still seeing very, very strong demand." Glauber said the biofuels mandate will require larger amounts of corn to produce the requisite amounts of ethanol. The government said Iowa's corn acreage would be about 400,000 less than forecast in the March 31 planting intensions report, which had pegged this year's Iowa acreage at 13.5 million acres. Iowa is the nation's leading corn-producing state, with annual production of around 2.5 billion bushels. Cash receipts from corn totaled more than $9 billion in Iowa last year, according to the USDA. Soybean supplies have been tight, and the cash price for July delivery rose by 1.2 cents a bushel to $9.48 on Wednesday. But the USDA report forecast a 2 percent increase in soybean acreage to 77 million acres. That sent the price of soybeans for November delivery down 9 cents a bushel to $9.02. For Iowa farmers, the concern this week has been less commodity prices and forecasts than damage that heavy rains last weekend did to corn and soybean crops. "I'm like everybody else, looking at yellow spots in my fields," said commodities consultant Terry Jones, who farms near Marengo. Heavy moisture has deprived corn of oxygen and nitrogen, Jones said. George Naylor, who farms near Churdan in Greene County, said he still had ponds in his fields on Wednesday. "I'm pretty sure that some of the corn will run out of nitrogen," Naylor said.

Originally posted by unityemissions

Originally posted by Amagnon
I feel that oil is being held down now - it is going to be used to drop a hammer on the global economy - I might be wrong, but oil is looking too cheap and its price has nothing to do with supply and demand, it is purely managed. I suspect when food prices and shortages are at there most critical we can expect a surge in energy prices.

Well feeling some way doesn't explain much, it just shows that you haven't a reasonable answer to fill in the gaps of your knowledge.

My knowledge is fine thanks - and if I make any inference it is well supported - but it doesn't seem necessary to go through a great deal of data when stating that an opinion is a 'possibility'.

When the Gulf oil disaster hit the US - domestic supply contracted by around 20% .. and the price .. went down. It is fairly obvious that uncertainty drove speculators out of oil, and the price corrected.

Saudi output is politically managed, and reserves and capacity are virtually opaque - Venezuela's production has been directly interfered with (until Chavez nationalized out from under the US cartel - still, the country has financial problems and this may open the door for the return of the same scum he just kicked out), China is aggressively forging exclusive contracts (notably in Africa) - Iran is not going to be cooperative with the west, Russian expansion of reserves may influence pricing for security reasons, because direct pipelines into China are far more secure than sea lanes - the price of oil is driven primarily by these political forces - and to some extent by speculation.

To point at supply and demand with respect to oil and blithely state that is the fundamental pricing mechanism is overly simplistic.

Security, politics and direct influence by a cartel of the financial and oil oligarchs is what sets the oil prices - with some significant influence from speculators. Supply and demand have some impact - but the actual supply side of the equation is fairly opaque, subject to security, politics and rumor mongering.

Over the next few years I expect the market forces will push further to the forefront, because of (rumored) dwindling capacity in Saudi and new trading agreements that exclude the US.

The cheap oil has everything to do with supply and demand. The credit crunch caused the recession, which dropped demand. This meant that prices would come down. They did. It's not rocket science. They've gone up over the last year and a half because people adjusted their spending's to include for necessities like fuel, rather than needless consumer wants. Everything else being the same, the price will continue to slowly rise until another bubble is burst, then the price will drop again, as demand goes even lower.

We'll eventually see triple digit prices per barrel again, but the current recession/depression is somewhat masking the "peak oil" crisis which is to come.

So just realize that it goes both ways: the bubbles effect demand for oil, and the dwindling supply of cheap oil effect the consumers purchasing power and resultant market data.

Peak oil is not something that is going to exert much influence in the short term - and while I agree that falling demand due to economic conditions has some effect on oil pricing, I don't agree that it is in any way a dominant factor.

If you want a good site that I have read for the last four years on this subject, it is

www.urbansurvival.com...
see the daily updates.
George Ure runs the site and has amazing insight into the long term effects everyone has been discussing regarding world finances etc. Cannot advise it more.

Originally posted by Amagnon

When the Gulf oil disaster hit the US - domestic supply contracted by around 20% .. and the price .. went down. It is fairly obvious that uncertainty drove speculators out of oil, and the price corrected.

Source please

what i dont get is this....if gold is traded in dollars...what happens to the gold price in europe if the dollar crashes and the euro is suddenly worth 10 dollars....does the euro price...my price....for gold decrease 90%...

reply to post by alienesque


i think it would....if i recall reading...deflation on all Dollar backed markets...would deflate considerably

it will be a slippery slope if it happens...

www.telegraph.co.uk...

World food supplies are caught in a pincer as China becomes a net importer of corn for the first time in modern history and Russia's drought inflicts even more damage than expected, raising the risk of a global grain shock in 2011.

The Moscow bank Uralsib said half of Russia's potato crop has been lost and the country's wheat crisis will drag on for a second year, forcing the Kremlin to draw on world stocks.

Wheat prices have risen 70pc since June to $7.30 a bushel as the worst heatwave for half a century ravages crops across the Black Sea region, an area that supplies a quarter of global wheat exports. This has caused knock-on effects through the whole nexus of grains and other foods.

"We had hoped things would calm down by September, but they haven't: more commodities are joining in," said Abdolreza Abbassanian, grain chief at the UN's Food and Agriculture Organisation.

The UN fears a repeat of the price spike in 2008 that set off global food riots. Wheat prices are still far below the $13 peak they reached then, and the global stocks to use ratio is still "safe" at 22pc. However, the outlook is darkening.

"It is not yet a crisis but things are precarious. If there is another bad year in Russia and Ukraine, this will leave us prone to shocks. All it takes then is one piece of bad news," he said.

Chris Weafer, Uralsib's chief economist, said Russia's wheat harvest will be near 60m tonnes this year, far short of the 75m consumed locally. The country has intervention stocks of 9.5m. "We think Russia faces shortfall of 17m tonnes and will have to import next year," he said.

Moscow has already disrupted grain supplies by imposing an export ban until late 2011, but markets have not discounted the risk of Russia becoming a substantial importer.

Luke Chandler at Rabobank said the drought has gone on long enough to hit winter wheat planting and damage yields for next year's spring wheat. "At this stage there is no substantial recovery in subsoil moisture levels in Russia," he said.

Ominously, a corn crunch is also creeping up on the world. Global stocks are at their lowest level for 37 years, at a stock to use ratio of 13pc. "This is getting extremely tight," said Mr Chandler, questioning whether the US should divert 36pc of its corn crop into ethanol for fuel.

Corn prices have jumped 40pc since June, reaching $5 a bushel. This was first blamed on lower US crop yields due to bad weather, but China has since revealed that it imported a record 432,000 tonnes in August.

Sudakshina Unnikrishnan from Barclays Capital said China may soon become a "structural" corn importer. While it imported corn in 1994, that was due to bad harvests. This time the cause is a permanent shift towards meat-based diets. This has led to a steady rise in the use of corn for animal feed. More than 70pc of China's corn is now used in feed. It takes about seven kilos of grain to produce one kilo of beef.

There is a widely-held view that roaring "agflation" and record gold prices signal inflation, evidence that ultra-loose monetary policy in the US and Europe is leaking excess liquidity into the world. Japan is the latest country to boost liquidity, launching "unsterilised" yen sales.

However, this year's spike is narrower. Crude oil is at $75 a barrel, half the 2008 peak. The CRB commodity index is back to 2004 levels. Natural gas prices have fallen this year. Copper has surged, but other base metals have lagged. While gold is in vogue, this is partly due to diversification out of euros and dollars by Asian governments, and loss of faith in Western leadership.

Central banks must make a tricky judgement call, deciding whether food shortages are inflationary or deflationary. They can be either. Policy makers in the US and Europe misread the commodity spike of 2008 as the start of a 1970s inflation spiral, when in reality it sapped broader demand. Central banks tightened policy, just as their economies were buckling. The financial system crashed two months later. Inflation collapsed in short order.

The US Federal Reserve does not want to repeat that mistake. Its minutes this week warned of "downside risks" to inflation. The message is clear: the Fed plans to steel its nerves this time and "look through" any spike in resource costs.

www.reuters.com...

NEW YORK (Reuters) - Gold jumped on Wednesday, hitting record highs for a fifth straight day and coming near $1,300 an ounce as the dollar tumbled the day after the Federal Reserve raised expectations that more monetary easing was on the way. Silver also hit a 2-1/2 year peak at above $21 an ounce, near its highest in 30 years as investors poured into exchange traded funds in search of cheaper safe-haven assets. The dollar fell broadly against major currencies after Tuesday's Fed statement signaled its readiness to pump billions of dollars into the economy through purchases of government debt, a process known as quantitative easing. The dollar slumped and bullion surged as investors sought a hedge against economic uncertainty. "Possible quantitative easing continues to put a significant weakening into the dollar," said Frank McGhee, head precious metals trader at Chicago-based Integrated Brokerage Services. "You're seeing the euro and gold rally together for the first time in a long time. So, the inverse relationship between gold and dollar may be finally reasserting itself." McGhee said gold rallied on concern that the dollar could head into an extended period of weakness, which often boosts gold. That inverse gold/dollar correlation has been shaky this year, but Reuters data showed it has strengthened to a negative 0.8 in the last five days from 0.3 for the past 25 days. Spot gold hit a new record of $1,296.10 an ounce and was trading at $1,290.90 an ounce at 3:37 p.m. EDT (1937 GMT), showing a 0.4 percent gain on the day. U.S. gold futures ended up $17.80 an ounce at $1,292.10. In addition to dollar weakness, gold has gotten a boost from concerns about the stability of the financial system and the outlook for fiat currencies in general. "This is not just about the dollar any more," said Pau Morilla-Giner, senior portfolio manager and head of alternative investments, equities and commodities at London & Capital. "This is about any currency that is used and generated in a country with massive dislocations, an excess of sovereign debt and a weak banking system. And now, for the first time in history, all major Western currencies have that problem." CONDITIONAL MONETARY EASING The dollar hit a five-month trough against the euro and fell to its weakest level versus yen since Japan's intervention. Credit Agricole analyst Robin Bhar said he interpreted the Fed statement as "a conditional easing bias." "It pushes the door for QE2 (a second round of quantitative easing) wider," he said, adding that this had implications "for a weaker dollar and further unease of what governments will do to weaken their currencies to support flagging economic growth." On charts, technical support was evident after spot gold cleared a trendline connecting the highs from December and June, and resistance from a rising channel dated back to late July coincided with the $1,300 mark. Gold has risen by over 17 percent this year, as investors have sought a relatively safe asset in which to park their cash as major currencies, stocks and bonds have become increasingly volatile. Among other precious metals, silver prices broke above $21.00 an ounce to their highest since March 2008 and remained within a hair's breadth of highs not seen since October 1980. Holdings in the iShares Silver Trust jumped 127.81 tonnes, the biggest gain in nearly 10 months, to 9,509.55 tonnes. Spot silver hit a high of $21.16. It stood at $21.10, up 0.8 percent on the day, and set for a rise of 9 percent in September, its largest monthly gain since November 2009. "Historically, the silver price has often acted as a geared play on gold prices, so when the gold price is rising, often the silver price outperforms," said Nicholas Brooks, head of research at London's ETF Securities. "However, when the gold price falls, silver can fall sharply. Silver had also tended to be more sensitive to the business cycle due to its heavy use in industry." Spot palladium rose 3.6 percent to $545.50 an ounce, while platinum gained 0.7 percent at $1,631.50.

Gold holds near record high on currency fears

www.reuters.com...


(Reuters) - Gold held near record highs on Thursday, eyeing a breach of $1,300 an ounce, while silver flirted with 30-year peaks as the threat of currency devaluation lifted interest in the metals as a safe store of value.

Spot gold was bid at $1,290.10 an ounce at 1412 GMT (10:12 a.m. EDT), against $1,289.60 late in New York on Wednesday. U.S. gold futures for December delivery slid 70 cents to $1,291.40.

Silver rose to a 2-1/2 year high at $21.21 an ounce -- within a few cents of its highest since 1980 -- and was later bid at $20.96 an ounce against $21.11.

Gold prices were lifted to a record $1,296.10 on Wednesday after the U.S. Federal Reserve indicated it was open to reintroducing quantitative easing to tackle sluggish U.S. economic growth, knocking the dollar.

The precious metal's rally, which has lifted prices some 3.5 percent so far this month, is showing few signs of running out of steam.

"Once we touch $1,300 it will probably stall there and there will be some profit-taking, but it won't be extensive," said Andrey Krychenkov, an analyst at VTB Capital.

"All the technical indicators are flashing completely overbought, but that doesn't mean anything when you're in an uptrend."

The dollar recovered from lows on Thursday but investors remain wary as speculation that the Federal Reserve will soon start printing more money drove down Treasury yields.

The euro retreated from a five-month high versus the U.S. unit however, stung by worry over Ireland's banking sector.

While the recovery in the U.S. currency is keeping a lid on further gains in gold, the threat of further monetary easing is providing good support to prices.