Tuesday February 26, 2008

Wheat breaches $12 for first time after biggest gain since 2002

bloomberg.com :

Chicago wheat prices rose by the most in more than five years, breaching $12 a bushel for the first time on signs that global crop production isn't keeping pace with demand. Corn and soybeans also gained close to records. Soybean futures, which reached a record $14.855 yesterday, have gained almost 90% in the past year after U.S. farmers sowed the fewest acres in 12 years and planted the most corn since 1944.

Global wheat stockpiles probably will fall to a 30-year low of 109.7 million metric tons, the U.S. Department of Agriculture estimates. Wheat for May delivery rose by the daily limit of 90 cents to $12.145 a bushel in after-hours electronic trading on the Chicago Board of Trade [CBOT], the biggest one-day gain since October 2002. Futures have more than doubled in the past year as adverse weather reduced output in Europe, Canada and Australia.

On the Minneapolis Grain Exchange [MGE], wheat for May delivery advanced $1.35 to $18.4325 a bushel. The March contract, which has no limit because it is the closest to delivery, rose as high as $24.26 a bushel, after yesterday becoming the first U.S. wheat contract to top $20 a bushel. On the Kansas City Board of Trade [KBOT], futures for May delivery also rose the exchange limit of 90 cents to $12.65 a bushel. Wheat was the fourth-biggest U.S. crop in 2007, valued at $13.7 billion, behind corn, soybeans and hay, government data show.

- Prices of bread, noodles, and other flour-based products are going to go up again. And I was just talking about "way over $10 wheat" in the post just before this one. I should really be hedging my exposure to rising food prices. I've added two agricultural ETF's to my watchlists - just a matter of time before I pull the trigger.

See also :

1. Wheat price rises above $10 for first time on supply concerns
2. Wheat hits record $11.53 on supply concerns
3. Bread and inflation
4. Why food costs more

(2008-02-26 14:00:45 SGT) [Biz] Permalink

Singapore CPI inflation hits 6.6% in Jan 2008 - a new 25-year record high

This article belongs to the Singapore inflation watch story arc.

channelnewsasia.com :

Singapore's annual inflation rate hit a 25-year high of 6.6% in January, according to Department of Statistics (DOS) data released on Monday [25 Feb 2008]. The inflation rate, as indicated by the consumer price index (CPI), was the highest since the 7.5% hit in March 1982. In December, the annual rate was 4.4%.

The Ministry of Trade and Industry (MTI) issued a statement along with the DOS data, saying the jump in inflation was due to one-off factors such as a housing value revision and that it was in line with the official inflation forecast of 4.5-5.5% for 2008. The MTI said inflation would start to ease in the second half of the year. The DOS said the jump in inflation was due largely to an 11.1% spike in housing costs recorded after a revision to values of public housing. Housing costs, which account for 21% of the consumer price index, have the third-largest weighting after food and transport/communication.

Singapore's rising inflation is in line with price increases worldwide driven by higher food and fuel costs. Oil prices last week touched an all-time high of above US$101 per barrel and were trading near US$100 on Monday. In Singapore, food prices, which carry the largest weighting in the index, rose 5.8% in January from a year earlier.

- Well I don't know about you, but I don't really buy the "inflation is going to ease" part. With commodities running into supply-side constraints (peak oil looming, global grain inventories down to 53 days), major central banks inflating their M3 money supply at double-digit rates, and the US being in an election year (with promises of goodies such as the $160 billion stimulus package and more coming down the line, which is highly inflationary), the one way that inflation is not going to totally run away in an exponential fashion is for housing prices to collapse and in my opinion that would generally hurt more than help.

I expect oil and gas prices, and precious metals such as gold and silver, and food prices of all kinds (wheat, sugar, corn, soybeans, meats and so on) to "run away to the upside" this year. I expect way over $1000 gold, way over $100 oil, way over $10 natural gas, and way over $10 wheat. All very nice, very round, and very big numbers, once you start adding them up. Inflation going to ease? Come on.

See also :

1. Singapore CPI inflation hits new 25-year high of 4.4% in December
2. Singapore : Inflation rate could push past 6% in Q1 2008
3. Singapore 2007Q4 GDP contracted 4.8%, 2008 economic growth forecast lowered
4. Singapore economy stuck in mud : inflation rising, M3 falling, GDP crashing - the stagflation formula

Updated :

1. Singapore CPI inflation rate for May 2008 continues at 26-year high of 7.5%
2. Singapore inflation rate hits new 26-year high of 7.5% in Apr 2008
3. Singapore CPI inflation rate hits 6.7% for Mar 2008, fastest in 26 years

(2008-02-26 11:04:21 SGT) [Biz] Permalink

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