Jason, Freddy Krueger and Inflation

What do they have in common? They’re hard to kill once they get loose. The Consumer Price Index (CPI) increased 0.6 percent in August, seasonally adjusted, and rose 3.7 percent over the last 12 months. That makes two months in a row that CPI has increased (annual CPI rose from three percent in June to 3.2 percent in July). But 3.7-percent inflation is a far cry from the runaway inflation of eight percent the U.S. experienced in 2022, but it is disturbing to see it increase when most analysts are looking for one to two more interest rate hikes at most from the Fed, before pausing and eventually cutting rates at some point in 2024. The share of the blame for the recent increase in inflation could be laid at the feet of a steady increase in energy prices over the last two months. October Crude Oil futures have increased 29 percent since the end of June going from $70/brl to just over $90/brl this last week. A recent announcement from Saudi Arabia to extend its one-million-barrels-per-day voluntary crude oil production cut until the end of the year has helped to propel oil prices even higher in the last two weeks. If you believe the last two months of inflation growth is due to higher energy prices, it would mean another increase in annual inflation could be on the way, which would put the Fed in a tough position.

Corn Prices Stuck as Early Harvest gets Under Way

December corn futures have traded between $5.05 and $4.74 for the last month. A tight range that has been getting tighter in the last two weeks considering the last year of volatile price swings. A dry, hot finish to the year is making it possible for farmers to get an early start on the fall harvest that could continue to keep the market under pressure in the coming month, as commercial elevators get a chance to fill storage facilities that limped into the end of the marketing year (Sept. 1) with less corn to carry over than usual. Leverage is changing hands from the seller to the buyer and negotiations are currently at a standstill when looking at the Board of Trade.

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