GregTheAnalyst
Independent Investor, Macro/Micro & Technical Analysis
Food inflation is about to skyrocket within months, lifting agricultural commodities. Per @kannbwx, poor crop health and a record-low planted area mean the US will produce its smallest wheat crop since 1972. The economy offsets excess central bank balance sheets through energy, food and shelter inflation, and a Strait of Hormuz disruption to 20% of oil supply implies a comparable GDP hit, with food inflation adding more. x.comÂ
Agricultural commodities are breaking higher as farmers go bankrupt without fertilizer, setting wheat up to go parabolic. With oil in a bullish zone, agricultural prices, a rough gauge of future food inflation, should resume their climb. A break above wheat's 50-period moving average would likely bring the 1,300 level again. x.comÂ
Wheat is breaking out on the weekly chart, with cycles up and fundamentals supportive, since exploding fertilizer prices mean lower crop yields and higher agricultural prices. A major cycle low likely formed in October 2025, and a new up wave tracking the 2022 pattern is expected to last into 2027; war also tends to lift inflation and food prices. x.comÂ
Sustained high energy prices strain US farming, logistics, manufacturing and consumers, so crude oil should fall dramatically from its elevated level. Middle East and Russia tensions are lifting WTI, shown near $103, while Trump will likely step in at some point to reduce uncertainty. x.com x.comÂ
Agricultural commodity prices should rise because a lack of fertilizer means lower crop yields. Cycles are up, wheat is breaking out on the weekly chart and agris look excellent across the board. Adecoagro could make a multi-quarter, multi-fold move once it breaks out of a 15.5-year base; it closed above its 200-day average after a likely five-year cycle low in December 2025. Above heavy supply near $12 it likely returns to its $16 high, while losing $8.88 could mean a retest of the lows. x.comÂ
Plummeting base costs and weaker demand from struggling economies abroad should push crude oil lower next year. The same forces will also weigh on many other commodities and services. x.comÂ
A 1970s-style stagflation recession would leave long-dated US Treasuries exposed to inflation despite economic weakness. Grocery inflation is set to hit 4% in 2027 as the economy spirals into that downturn. x.comÂ
Living costs in a stage 4 decline will take over from AI as the driver of the US equity bull market. AI drove it since 2023, but its capital spending and debt loads are in question; falling food prices, rents and housing prices make a bearish view hard to justify. x.com x.comÂ
Higher transport and input costs threaten US stock margins and demand. The PPI surprise shows the oil-cost pressure described in March playing out: headline rose 1.3% monthly versus 0.6% expected, and core 0.7% versus 0.3%. The March scenario put logistics costs at 3-6 weeks and consumer prices and weaker demand at 1-3 months; margins could shrink 100-300 basis points if costs cannot be passed on. The full scenario was not expected to play out. x.com x.comÂ
Rising oil worsens inflation and puts Fed rate hikes back in focus, making non-yielding gold and silver less attractive. Investors are also selling metals to meet margin calls. An estimated $1.83 trillion in combined value was wiped out over recent sessions; both metals remain under pressure as long as oil keeps rising and rate-hike expectations stay high. x.comÂ
US stocks benefit when rates rise with growth because earnings outpace the drag from higher discount rates. Such periods have historically been very bullish, unlike inflation-led rate rises amid slowing growth. Since fall 2025 the 10-year yield rose from 4.1% to 5.1% while nominal GDP growth accelerated to 6.6%, faster than rates. Being long offers better risk/reward; high oil prices due to the war are the remaining inflation pressure, and an end to the war would improve the setup further. x.comÂ
Long-dated US Treasuries look favorable as the rise in 10-year yields appears mostly over; inflation searches have peaked, and only 13 of 29 tracked commodities are above their 50-day averages. x.com x.com x.comÂ
