Adding to the daily inflation/deflation debate, much has been made of the drop in industrial material prices, including energy, (Journal of Commerce Index down 13% from its Apr high) in response to the slowing in China, Europe and the US. However, very little focus has been given to the recent rise in agricultural commodity prices. Today, corn and wheat are rallying to 2 month highs, soybeans are at 2 week highs, sugar is at 10 week highs and coffee is rising to just off 12 year highs. Also, cattle prices are at 1 month highs and lean hog prices are near 1 yr highs. DBA, the ag etf, is less than 1% off its highest level in 2 months. Food makes up 18.6% of the PPI and the food/beverages category is 14.8% of the CPI.
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