The first meal of the day may soon become more expensive for consumers as food inflation soars.
A combination of citrus disease and adverse weather conditions have plagued Florida's orange crop and may soon constrain supplies, which has already forced orange juice prices to multi-year highs as demand remains robust.
"You have your classical supply-demand mismatch," Shawn Hackett, president of Hackett Financial Advisors, which specializes in agricultural commodities analysis, told CNN Bussiness. Due to dwindling supply, "much higher prices are coming to supermarkets," he warned.
Last week, the US Agriculture Department issued a report about the state of Florida's orange crop, revealing the Sunshine State will harvest only 44.5 million boxes of oranges this year, the smallest harvest since the 1944-45 season.
"The Florida citrus crop is going to be one of the smallest crops since the 1940s," said Judith Ganes, president of J Ganes Consulting, which offers commodities analysis to the food and agriculture industry.
"It's going to be even smaller than the production that occurred several years ago ... when Hurricane Irma blew through Florida," Ganes said.
In what appears to be a citrus shortage developing, frozen orange juice futures have been squeezed higher, up more than 50% since the start of the virus pandemic. Prices are around $1.55 per pound as speculators could send prices to as high as $2.
Besides oranges, prices of other agricultural commodities have risen over the last year as supply-chain disruptions and or bad weather has kept inventory low.
Breakfast is becoming more expensive. Consumers are paying some of the highest prices for food in a decade as their real wages are wiped out by inflation. None of this has helped President Biden ahead of the midterms as his polling numbers drop to new lows.
Six Commodities Investments to Buy as Putin Wages War on Ukraine
Six commodities investments to buy amid the sustained attack of Ukraine by Russia’s President Vladimir Putin and rising inflation provide potential to…
Six commodities investments to buy amid the sustained attack of Ukraine by Russia’s President Vladimir Putin and rising inflation provide potential to profit even as the market has been pulling back so far in 2022.
The six commodities investments to buy include those involved in oil, gold and grain due to current supply shortages that are showing no signs of abating anytime soon. Putin’s order for Russian troops to invade Ukraine on Feb. 24 has disrupted the neighboring nation’s agricultural production, led to the theft of grain and imposed an ongoing blockade in the Black Sea to stop farmers from exporting their crops.
Crude oil inventories are down to a “dangerously low point” across Europe, North America and Organisation for Economic Co-operation and Development (OECD) Asia, just as spare production capacity from OPEC+ nations slid to the lowest levels since April 2020, according to BofA Global Research. Inventories of petroleum products also have fallen to “precarious levels” for middle distillates and even gasoline as the market heads into the peak of the U.S. summer driving season, the investment firm added.
As a result, refined petroleum cracks — the differences between crude oil and the prices of the wholesale petroleum products such as gasoline — recently have “spiked to record levels,” contributing to volatility, BofA wrote. In addition, strategic oil barrels held by OECD governments already are low and likely to decline steeply going forward, leaving consumers exposed to future negative supply shocks, BofA predicted.
Pension Fund Chairman Recommends Broad Commodity Funds
Bob Carlson, a pension fund chairman who also leads the Retirement Watch investment newsletter, recommended Cohen & Steers MLP & Energy Opportunity Fund (MLOAX) to all the portfolios in his June 2022 issue.
Oil and natural gas should be good investments as Europe looks to reduce dependence on Russian exports, Carlson told me. Plus, energy producers in the United States are focused on increasing cash flow and earnings, not maximizing drilling expenses in the short run to increase output, he added.
Bob Carlson, who leads Retirement Watch, meets with Paul Dykewicz.
Good investment opportunities can be found with companies that provide the pipelines, storage facilities and other infrastructure needed to supply the world with oil, natural gas and other energy sources, Carlson continued.
“One of the attractive qualities of these investments is that their revenues are independent of the prices of the commodities,” Carlson counseled. “The firms charge fees for their services, and the fees often are adjusted for inflation. Their revenues and earnings depend on the volume of commodities passing through their facilities, not the price of the commodity.”
Key energy service companies provide total returns, aided by current income and price appreciation, through investments in energy-related master limited partnerships (MLPs) and securities of industry companies, Carlson pointed out. Those businesses are expected to derive at least 50% of their revenues or operating income from exploration, production, gathering, transportation, processing, storage, refining, distribution or marketing of natural gas, crude oil and other energy resources.
Chart courtesy of www.stockcharts.com
Cohen & Steers Fund Leads List of Six Commodities Investments to Buy
Cohen & Steers MLP & Energy Opportunity Fund recently held 53 positions and had 50% of its portfolio in the 10 largest positions. Top holdings of the fund included Enbridge (NYSE: ENB), Cheniere Energy (NYSEAMERICAN: LNG), Williams Companies (NYSE: WMB), TC Energy (NYSE: TRP) and Energy Transfer (NYSE: ET).
The fund has achieved strong returns since April 2020. Indeed, it has been on an upward trajectory since the second half of December 2021.
“Crucially, oil prices have held up well even in the face of a slowing Chinese economy and widespread lockdowns,” according to BofA. “Given that most China indicators point to a major decline in mobility across the country, any improvement in the COVID-19 situation in large Chinese cities could send oil prices much higher.”
Carlson’s Chooses DBA to Join Six Commodities Investments to Buy
Despite the evils of war, investors still can profit from the rise in grain prices and other commodities through the futures markets, even as many other equities slip. Instead of buying futures directly, investors can purchase diversified agriculture commodities through Invesco DB Agriculture Fund (DBA), Carlson said.
That ETF seeks to track changes in the DBIQ Diversified Agriculture Index Excess Return. The ETF also earns interest income from cash it invests primarily in treasury securities, while holding them as collateral for the futures contracts.
The major holdings in the index are soybeans, wheat, corn, coffee and live cattle. The index is reconstituted each November.
Chart courtesy of www.stockcharts.com
Gold Funds Featured Among Six Commodities Investments to Buy
Carlson also is recommending gold through iShares Gold Trust (IAU). He described it as the “cheapest, most liquid way” to invest in the shiny yellow metal.
Gold has had its ups and downs in the face of rising global inflation, Russia’s invasion of Ukraine, China’s increasing military flyovers of nearby Asian nations and other geopolitical conflicts. At the same time, the U.S. dollar has been appreciating amid high inflation after the Fed recently raised interest rates by 0.5% and promised additional increases later in 2022.
However, there are many risks for the U.S. dollar, so continuing to hold gold remains a good hedge, Carlson counseled.
IAU has retreated since early March, so investors seeking to buy it now that it is rebounding still may do so. Those who believe inflation may stay through 2022 can try to capture gains before the trend no longer is a friend.
Chart courtesy of www.stockcharts.com
Skousen Calls GLD One of the Six Commodities Investments to Buy
“Gold has done far better than stocks, which are down 15-25% this year,” said Mark Skousen, who is recommending SPDR Gold Shares (NYSE Arca: GLD) in his Forecasts & Strategies investment newsletter.
Mark Skousen, head of Forecasts & Strategies, meets with Paul Dykewicz.
GLD has risen nearly 16% since Skousen recommended it about two years ago. Gold climbed 2021 in anticipation of rising inflation, but its performance has been flat so far this year. If gold truly is an indicator of inflation, the previous yellow metal’s stagnant price may be signaling that price inflation will wane heading into 2023.
The investment objective is for the GLD shares to reflect the performance of the price of gold bullion, after subtracting the trust’s expenses. The trust, formed on November 12, 2004, physically holds gold bars.
The trust’s shares are designed for investors who want a cost-effective and convenient way to invest in gold, according to the company’s prospectus. Skousen, who also leads the Five Star Trader, Home Run Trader, TNT Trader and Fast Money Alert services, recently was a featured speaker at the Vancouver Resource Investment Conference and advised attendees that he recommended gold as a minor holding in every portfolio.
Chart courtesy of www.stockcharts.com
EPD Is Another of the Six Commodities Investments to Buy
Oil has done much better as an inflation hedge than gold, Skousen said. One example is his recommendation of Enterprise Products Partners (EPD, $27, 7% yield), up 27% year to date.
EPD has been the “best performer” in the Forecasts & Strategies investment newsletter so far this year, Skousen said. Enterprise Products Partners is one of the largest publicly traded partnerships and a key North American provider of midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products and petrochemicals.
The company’s services include natural gas gathering, treating, processing, transportation and storage. In addition, Enterprise Products Partners provides NGL transportation, fractionation, storage and import and export terminals. It further offers crude oil gathering, transportation, storage and terminals, along with petrochemical and refined products transportation, storage and terminals, as well as a marine transportation business.
I personally have owned Enterprise Products Partners since shortly after the 2020 stock market crash when I bought the stock as it started to recover. The stock has been trending upward since the end of 2021.
Chart courtesy of www.stockcharts.com
Money Manager Picks One of Six Commodities Investments to Buy
A seasoned investment professional told me that she likes farm machinery company Deere (NYSE: DE) to profit from agriculture. Michelle Connell, a former portfolio manager who now serves as president of Dallas-based Portia Capital Management, said she still likes Deere despite its 14% drop after it reported results last week.
Michelle Connell, CEO, Portia Capital Management
Deere’s key issues are supply-related, since demand for agricultural equipment remains strong, especially for the company’s machinery that is more environmentally friendly than its rivals, Connell continued.
Deere is also focused on providing the farming industry with autonomous equipment, Connell counseled. Wall Street analysts expect Deere to have a better story and performance in the second half of 2022 and in full-year 2023.
Connell cited the following to support her recommendation of Deere:
-More than half its revenues come from large agriculture.
-If the war in Ukraine continues, U.S. farmers will benefit from higher prices for their crops.
-Increased agricultural profits mean that that farmers and farming corporations will be more likely to buy large, expensive farm equipment.
Deere has fallen back since its recent high on April 20, so investors should be able to purchase shares at reduced prices, Connell continued.
Chart courtesy of www.stockcharts.com
Supply Chains May Improve as China Starts to Lower COVID Curbs
China is easing its COVID-19 restrictions and it could allow goods produced there to start flowing normally again in the coming weeks. China’s lockdowns have affected an estimated 373 million people, including roughly 40% of its gross domestic product (GDP). Disrupted supply chains have affected products such as rice, oil and natural gas.
Shanghai, home to the world’s largest port and 25 million residents, has strained to unload cargo due to strict regulations that have caused shipping containers to stack up. Some Shanghai residents posted videos online to complain about needing food, even though government officials sought to block such public expressions of frustration.
Chinese authorities also drew public criticism for forcibly separating young children with COVID-19 from their parents to prioritize stopping the spread of a new, contagious subvariant of Omicron, BA.2. The variant also has been causing new infections in European nations such as Germany, the Netherlands and Switzerland.
U.S. COVID Deaths Climb Past 1-Million Mark
U.S. COVID-19 deaths crossed the 1-million mark last week and have climbed further to 1,002,726 as of May 24, according to Johns Hopkins University. Cases in the United States, as of that date, hit 83,501,455. America retains the dubious distinction as the country with the highest numbers of COVID-19 deaths and cases.
COVID-19 deaths worldwide totaled 6,280,342 on May 24, according to Johns Hopkins. Cases across the globe have climbed to 526,664,642.
Roughly 77.8% of the U.S. population, or 258,562,059, have obtained at least one dose of a COVID-19 vaccine, as of May 24, the CDC reported. Fully vaccinated people total 221,001,614, or 66.6%, of America’s population, according to the CDC. The United States also has given at least one COVID-19 booster vaccine to 102.9 million people, up about 500,000 in the past week.
New data on so-called “long-haul” COVID patients released on May 24 reported that even though some symptoms improve others may persist, according to the Northwestern Medicine Neuro COVID-19 Clinic. Most of the 52 patients monitored in the Northwestern study reported “brain fog,” numbness or tingling, headache, dizziness, blurred vision and fatigue, even 15 months after initial diagnoses of COVID-19.
The six commodities investments to buy are intended to profit from rising energy, gold and grain prices. Despite the market’s volatility, the highest inflation in 40 years, the Fed’s plan for further interest rate hikes to curb price hikes and increasing federal deficits, investors are finding profitable opportunities in energy, gold and grains.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.
The post Six Commodities Investments to Buy as Putin Wages War on Ukraine appeared first on Stock Investor.treasury securities covid-19 dow jones equities stocks fed etf cdc vaccine spread deaths gdp interest rates commodities gold oil european europe germany netherlands russia ukraine china
Bitcoin, Gold and Bonds could dominate 2022 – Bloomberg Intelligence
Inflation is arguably out of control globally, with rates hitting as high as 9% in the United Kingdom while the M1 money supply grows.
The post Bitcoin,…
Inflation is arguably out of control globally, with rates hitting as high as 9% in the U.K. while the M1 money supply grows. The stock markets have taken a massive hit, with over $7 trillion wiped off the Nasdaq in the last four months.
A senior analyst at Bloomberg Intelligence, Mike McGlone, said:
“If stocks are going limp, Bitcoin, Gold, and Bonds could rule.”
McGlone shared the chart below to support his claim.
This spread chart shows the U.S. Treasury 10-year bond yield in orange and the price of Bitcoin against the NASDAQ 100 over the past four years. At the bottom of the Bitcoin bear market, around 2018, the chart shows a double bottom ratio of 0.5 before rising to 2.0 in early 2021.
The ability of Bitcoin to hold the 2.0 ratio since January 2021 indicates that it is performing well amid its first potential recession. The last extended global recession occurred due to the 2008 financial crisis, which was a year before the birth of Bitcoin.
Since its inception, Bitcoin has flourished in a thriving global economy. The COVID-19 hurdle of early 2020 was surpassed due to trillions of dollars flooding into circulation, much of which made its way into cryptocurrency. As the world deals with the impact of the rapid increase in money supply, Bitcoin appears to be holding firm compared to other risk-on investments.
McGlone states that “Greater Risk in About a Year May Be #Deflation.” However, his overall sentiment continues to focus on the ability of Bitcoin and Gold to outperform the market in the near future.
“Following an extended period of outperformance, an underperformance period may be overdue for the #stockmarket, which may shine on #gold and #Bitcoin. The BOLD1 Index (gold, bitcoin combo) has kept pace with the Nasdaq 100 Stock Index in a bull market and with lower volatility.”
The supporting chart shows the declining volatility of BOLD1 against the NASDAQ 100 index since 2019.
The post Bitcoin, Gold and Bonds could dominate 2022 – Bloomberg Intelligence appeared first on CryptoSlate.bonds covid-19 nasdaq stocks cryptocurrency bitcoin stock markets gold
Shanghai: world’s biggest port is returning to normal, but supply chains will get worse before they get better
China lockdowns and Ukraine war have made global supply chains far worse in 2022 than many expected.
Shanghai is slowly emerging from a gruelling COVID lockdown that has all but immobilised the city since March. Although Shanghai’s port, which handles one-fifth of China’s shipping volumes, has been operating throughout, it has been running at severely reduced capacity. Many shipments have either been cancelled, postponed or rerouted to other Chinese mega-ports such as Ningbo-Zhousan.
With the city due to fully reopen on June 1, the port is going to be in overdrive as manufacturers try to fulfil backlogs, with serious knock-on effects around the world. It is an example of how global supply chains in 2022 have been destabilised in ways that were not apparent at the beginning of the year. In January, we predicted ongoing disruption as the world economy continued to recover from the pandemic. In fact, things have got worse.
Besides Shanghai, other major Chinese ports such as Shenzhen have also been affected by lockdowns. And then there is Ukraine. The war has pushed up prices for goods and services even higher than predicted rises for 2022, as well as adding to logistical difficulties.
According to the New York Federal Reserve’s global supply chain pressure index, which takes account of issues such as freight rates, delivery times and backlogs, supply chains are under unprecedented pressure – and have been getting worse recently.
The global supply chain pressure index
Ukraine and food
Ukraine might not have been on many people’s radar as a key economic partner, but it was already seen as a major bottleneck for food supply chains long before the war got underway. This was due to poor port infrastructure and the large concentration of world maize and wheat supplies moving through. The war was therefore always going to have a devastating impact on international supplies.
You can get a good sense of the ripple effect on prices by considering a bag of fish and chips. Sunflower oil for frying used to be imported from Russia and Ukraine. Flour for the batter came from Ukraine. Much of the fish used to be caught by Russian trawlers but is about to be affected by sanctions. In all cases, this translates into shortages and/or raised prices.
Then there is electricity and gas, whose prices have skyrocketed thanks to sanctions, affecting everything from deliveries to food production. And since Russia is a key player in the fertiliser market, even domestically grown potatoes will become more expensive soon enough.
With Ukraine’s ports blockaded now for months, Russia is also being accused of holding food hostage for millions around the world. Developing countries are being hit hardest, while in richer nations, the poorest are bearing the brunt. Even when the conflict ends, restarting food exports from Ukraine will not be easy. Capacity on land transport is limited and the sea, in addition to the Russian blockade, is heavily mined.
The double whammy
Beyond food, the war’s impact on energy and fuel prices has made both production and transport more expensive across the board, exacerbating the effects from China’s COVID problems. This has hit major western players, including Apple, Tesla, Adidas, Amazon and General Electric. Easing restrictions in China are now allowing some, such as Volkswagen and Tesla, to restart production, but logistics delays linger, with everything from healthcare to entertainment gadgets affected.
Around the world, many major ports experienced congestion in 2021, with the US west coast ports of Los Angeles and Long Beach enduring long periods with dozens of ships waiting to dock. This eased noticeably in early 2022, but Shanghai port’s return to normal operations is likely to lead to a torrent of products heading west as manufacturers do their best to clear order backlogs.
This will probably mean bottlenecks and delays at the western end in the coming weeks. Meanwhile, the heightened demand for ships will potentially affect freight prices: these went up at least five-fold in 2021 as suppliers struggled to deal with pent-up COVID demand, and even after reducing in 2022 they are still about four times the pre-COVID rate. Any further increases will put more pressure on consumer prices.
There is hope
Even if there are no more China lockdowns and the Ukraine crisis does not spread, the global supply chain is clearly going to be under heavy pressure for the rest of the year. According to one recent UK survey, three-quarters of companies think 2023 will be tough too.
For smaller businesses in particular, a failure to adapt to the changing environment could threaten their survival. At a time when fears of a recession are already in the wind, this could make longer-term economic recovery all the more difficult.
But for the medium term at least, there are reasons to be cautiously optimistic. For decades, most supply chains were focused on cutting costs. Manufacturing was outsourced to specialist suppliers, ideally in countries with lower labour costs. Firms kept minimal inventories and used short-term contracts to be as flexible as possible.
The weaknesses in this “just-in-time” system were exposed by COVID and the US/China trade war, and now many companies are putting more emphasis on being resilient and also having a clearer view of all the suppliers in the chain. In this “just-in-case” model, some inefficiencies are considered an advantage rather than a waste of money.
Cost is still of course a key consideration, but product quality and availability are now seen as more important. Companies are also diversifying their supplier base so that they are not as dependent on China (with the additional benefit of reducing their carbon footprints). US players such as Walmart, Boeing and Ford are among those turning to locations nearer their home markets, while numerous UK and mainland European companies are following suit.
Shifts like these should at least make supply chains a bit more robust in future, even if this probably also leads to higher prices. At the same time, we see efforts to anticipate future crises. The EU and US plan to develop an early warning system to identify future global disruptions to semiconductor supply chains, which have affected everything from production to cars to video game consoles. More broadly, a recent UK report called on the government to establish a resilience task force and work with industry to increase visibility within supply chains.
That sort of approach would be well worth implementing. Supply chains are going through their most turbulent period in many years, but learning lessons and adapting will hopefully mean that the worst can be avoided in future.
The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.recession pandemic economic recovery federal reserve spread lockdown recession recovery oil european uk russia ukraine eu china
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