The price of agricultural commodities like wheat, corn and soy have been absolutely soaring lately.
There are a number of factors driving the move, though one contributor is simply the lack of a robust supply response so far to all the demand. Yesterday on TV we spoke with Scott Irwin an agricultural economist at the University of Illinois, who cited surprisingly moderate planting intentions as being a driver of the huge move up in prices since the beginning of April.
Meanwhile, if you haven’t noticed, copper is getting close to trading at $10,000 a ton on the London Metals Exchange.
And as Thomas Biesheuvel reported today, companies and investors are still reluctant to expand mining despite the surge, making the types of long-term bets that would bring on more supply. This of course has the effect of making futures markets tighter, pushing up prices all else equal.
Yesterday I wrote about how prices are high on many goods today because of past choices that reduced supply. But it’s clear that those choices are still being made right now, whether it’s reluctance to invest in new mining capacity, or farmers remaining conservative in their planting decisions.