Commodity Prices Continue Surge

the staff of the Ridgewood blog

Ridgewood NJ, the markets are giving many mixed signals on inflation (the 10 year Treasury is stable between 1.55% and 1.7% and the TIPS spread is signaling a 10-year inflation rate of about 2.4%.) .

Commodities prices, one of the best forward-looking indicators of inflation are rising to nearly their highest levels in almost a decade. Major economies emerging from the pandemic are stoking demand for metals, food, and energy. At the same time, all this free money the government is pouring out is artificially and temporarily stoking demand. The lack of workers due to high unemployment benefits is creating chokeholds on supply chains.

Corn prices have surged above $7 a bushel for the first time in more than eight years amid a lack of rainfall in Brazil. Gas prices are above $3 a gallon and above $4 now in California.

Lumber prices hit another record high this week, trading above $1400 per thousand board feet as mills and timber companies struggle to meet demand. In 2021, lumber prices are up roughly 57%, and over the past year, that number moves to more than 325%.