The prices of various soft commodities have skyrocketed recently, from orange juice to live cattle, which is making the inflation picture more complex. Unfavourable weather conditions as well as increased climate risks have led to a shortage in supply, making it costly for consumers. Core inflation, which does not take into account food and energy, still sitting at a high 4.3% in August, further adds to financial suffering. Futures contracts of orange juice, live cattle, raw sugar and cocoa all hit their yearly highs this month, with Ancora's Paul Caruso stating that they are in a "supply-driven bull market". The S&P GSCI Softs index, an index focusing on soft commodities alone, has risen by 18% since the beginning of 2021.
The abatement of noise in the area was remarkable.
The remarkable decrease in noise in the area was noticeable.
The cost of orange juice has risen significantly due to a worldwide citrus shortage and the hurricanes that affected Florida, the main supplier of orange juice in the US. Furthermore, Brazil and Mexico, two of the biggest exporters, estimated a lower yield of oranges for the year, as the warmer climate made it difficult to harvest. The juice futures market soared to a record high of $3.50 per pound this month, while live cattle futures hit an all-time peak of $1.9205 per pound. Meat prices are surging due to amplified beef demand, plus soaring labor and fuel costs. An ongoing drought in the Midwest has damaged crops, causing some farmers to lower their herds. Data from the US Department of Agriculture predicts decreasing supplies in the next few years, and the possibility of a price hike persists up until 2025 and 2026, when supplies are projected to fill in again. Not only prices for breakfast, lunch and other main meals have gone up, but also those for desserts. Raw sugar and cocoa prices have skyrocketed in the past months, with sugar reaching its highest level since 2012 at 27.62 cents per pound, and cocoa hitting $3,763 per metric ton, the highest value in the past decade. Rising demand and diminished production in countries such as India and Thailand due to the extreme weather conditions were responsible for the sudden increase in sugar prices. Given that food and energy are not taken into consideration for core inflation, it is likely that shoppers feel a higher price than what the central bank policymakers consider. With inputs like sugar, cocoa and Robusta beans for coffee becoming increasingly expensive, the world’s largest food companies are trying to pass on these costs to consumers. Despite this, corn and wheat prices have dropped from their earlier high, offering some respite.
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Soybean futures dropped to their lowest point in a month when the US Department of Agriculture revealed export sales of the commodity were lower than anticipated. January and February saw the cost of corn and wheat reach new highs, yet both have since fallen. Certain experts predict a rise in interest rates and slower economic growth will have people buying fewer goods. Jeff Kilburg, from KKM Financial, commented on the situation saying it's based largely on demand, and that if there's a downturn there, the stock market could be affected.
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