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Bread, a huge part of the Peruvian diet, keeps going up; and, from a technical perspective, we can expect higher prices to come.
Today CME Wheat Continuous Contract EOD surged to the 1247.5, after price had broken out of the contraction triangle pattern last Thursday. This morning, price gapped up putting the commodity on a path to the 1269.5 March 8, 2022 high. A breach of this resistance and there is a good chance price will test the 2008 1349.5 all-time high.
Over in Eastern Europe, due to the war, Ukraine is expecting a 35% drop in wheat exports this year. Wheat prices have risen about 46% across the globe since the Russian/Ukraine conflict. Pre-war Russia and Ukraine exported 30% of the world wheat.
But it’s not just the war weighing on commodity prices. Inflation has been heating up since the Covid 19 lockdowns in 2020. Oil is back up above 100 dollars a barrel and the CRB commodity index is at the $308.58—a price not seen since May of 2014!
Central banks all across the globe are tightening monetary policy. The US Fed raised its rate by 50 basis points last meeting and is expected to raise by 50 basis points at their next.
Inflation look really bad all over the world. And it does not look like it is stopping any time soon. The American economy shrank by an annualized 1.4% in Q1 of 2022. This was well below market forecast. EU GDP growth rate expanded by a mere 0.2% in Q1. Peru’s GDP growth rates stagnated coming in at 0.0%.
This along with inflation its called stagflation–like in the 70s.