Posted on 04/27/2021 5:06:37 AM PDT by blam
If you think inflation is already blistering hot - as most companies and survey respondents clearly do - and the worst case been largely priced in, with little inflationary upside left, think again.
As Bloomberg notes, last week saw the Bloomberg Agriculture Spot Index rise by the most in almost nine years, to extend the stellar rally seen since last August.
Due to the lag between ag costs and finished food prices, the latter are about to soar. And since food is a large component of CPI baskets in Asia, Bloomberg warns that "this large inflationary impulse in the region that houses more than half the world’s population should result in higher wage costs in the factory base of the world. As CPI and PPI rise in Asia, it will feed through globally in the months ahead."
Think "Arab Spring" (which sparked a domino effect of revolutions in North Africa and the Middle East due to soaring food prices) only in Asia this time... and on steroids. And then read what Albert Edwards wrote in December when he explained why he is "Starting To Panic About Soaring Food Prices."
Metal Boom: Copper Hits 10-Year High Amid Supply Constraints And Infrastructure Plans (Dr Copper)
A lot of us were saying, last spring, that if the FedGov (and other governments) continued raining down trillions from heaven, we would be seeing serious inflation by 2921 and possible hyperinflation. It’s one of the reasons I created my tag line last year.
First it was lumber, then gas, and now food, and shortages, and real estate.
We’re already there. When a sheet of OSB goes from $8 to $60 in less than a year, that is serious inflation. And there is no wood shortage.
2921=2021
Destroy the energy sector and costs are driven up. Thank you Green Raw Deal and OACommie.
-——First it was lumber——
I went to Lowes Saturday and they were out of landscape timbers
partially offset by debt destruction followed by asset deflation.
sucks to be China, that country that cannot grow enough food to feed their people
It's why china and bill gates are buying up all the US farmland. Better get a taste for nachos because that's nacho food anymore.
I’m shocked people are still buying at those prices. I’ve put off all construction projects until the prices return to normal. Apparently it is the mills that are the problem thanks to Rona. That WILL end.
Also, when the current housing boom goes bust, this will roll back fast.
Fortunately, I only need a few 2x4’s to finish my building. The rest will be sheetrock. That’s not really gone up. Yet.
Yes, there is a wood shortage.
There is a REAL lumber, plywood and especially OSB shortage.
Housing starts hit 1.7 million last month. The big increase is in single family(stand alone) house construction both in the USA and Canada. FYI, Canadian housing starts are at all time highs.
This demand increase for single family housing has been driven by the exodus from the big cities due to covid/BLM that we FReepers have discussed a length over the last year.
Mills are having a hard time increasing production because like every other industry they are having a hard time hiring people. Mills out in Idaho, WA, OR are offering $17/hour including full benefits. Some are offering signing bonuses just like other industries. Again, we have all have spoken at length that the enhanced unemployment benefits have created an incentive not to go back to work. Especially in the southern US states where sawmills pay less money(AL, MS, AR)
The winter storm in TX caused a temporary shortage of the resin/glue used by almost every major OSB producer in the center of the country.
Container shortages have caused delays in shipments from European sawmills. Plus northern Europe actually had a bad winter. Plus all the covid issues just like us.
{I bet they were triple in price too!
Already seeing food at higher prices, Meat is the highest I’ve seen it in since Carter. Dog food small bag nearly $20, I don’t buy crap to feed my 2 12 lb girls. All types of soap, shampoo products are going up.
OTC MEDS are up to, and the crap doesn’t work as well as 30% less Generic script meds.
Better put in a garden with Heirloom plants. Backyard is trash soil/rocks. Stock up while cheaper.
My understanding is that mills are only working at 25% capacity, so they seem to be the bottleneck.
But yes, there is a lot going on right now and we are just starting to feel the REAL pain caused by shutting down our culture. Hence my tag line I threw up last year. This is going to be one for the history books.
Sheetrock is on allocation. That means there is a shortage of it. They can sell more than they can produce.
Copper/Romex wire has doubled in price in the last year.
Roofing has gone up about 30%.
Steel has gone up 30%.
Composite decking has gone up about 30% or more.
Basically, every item that goes into a house has increased in the last year.
I have customers(lumber yards and truss plants) that are so busy they have stated that they will NOT quote ANY new customers for the rest of the year. I do not mean people like you or me buying a few 2x4’s. I am mean house builders/contractors.
No upright frost free freezers either. Ours is old, making noises, seals rotting.
Medical took up spare money since Jan 16. had a Meniere’s attack, new hearing aids.
That 5 cubic ft chinese chest freezer which cost $100 last year, is now $199.00. Window AC is $139,was $99.
Hubby had to get cheaper beer. Has 1 with his super. Most products at the Navy Exchange are geared to high salary Brass. $70 bucks for Polo shorts.
Never seen Goodwill so busy, and items are not as good.
We’ll see. I’m skeptical.
BULL SH%T
Sawmills are producing every bit of lumber they can. We are at record high prices. They know the price will eventually go down. They are making record high profits. They are putting every bit of lumber they can through the planer.
Some of these same mills were LOSING money a couple years ago.
Now, they are making record profits.
Plus most of the Canadians had the tariff reduced from 20% down to 8% on the lumber the ship into the USA.
What this will lead to is the Canadian mills buying more US mills. For example, West Fraser(second biggest mill in North America) just bought Norbord(OSB producer).
No, this is another myth. They said this in the 90s when “Arabs” were supposedly buying up all the farmland.
There is no massive ag control by Chicoms.
We heard the same thing about Japanese buying up US assets like Rock Center & Vegas. Didn’t happen. They bought for a while, couldn’t manage the assets, dropped them.
Well, right now a LOT of the construction price increases are demand for new houses.
Here in AZ, contractors are refunding down-payments because the demand is so high they can’t keep up.
We in Chandler are having about 300 people per month move into town, and that was BEFORE Intel and another big MFG business moved in bringing . . . wait for it . . . 13,000 jobs in a city of 250,000. Except for lib cesspools like SF, construction is exploding. So this is demand driven, not monetary driven.
We do have some energy escalation-—as I predicted when Biteme took office. The alternative, though, was a US oil business that couldn’t afford to stay in business, so it’s a good thing for them.
We wanted a 30x60 shop put up on our property last year. We talked to the builder in January and he said he could get to us probably in August.
The Lord has taken care of us for a very long time. The builder called and said he could get us in earlier, and by the middle of May our building was complete. I put in a bunch of shelving. And THEN the prices started rising. I would like to put sheetrock in the “office/mancave” section of it, but it’s not an absolute requirement.
I expected runaway inflation this year (hence my tagline), so I’m really watching this whole thing mostly as a spectator. This is why we bought chickens last summer. And why we bought a half a steer. And seriously built up our garden. We’re about as prepared as you can get without going full-on prepper.
Interest rates are effectively 0%.
Why not drive trillions into housing when home loans are (effectively) free?
What could posssibly go wrong?
Last fall my friend moved from Seattle to Idaho. Thy had a deposit on a house that was under construction. But it simply was not getting built. Eventually they got their deposit back and bought a different house from an existing owner. Meanwhile, the price of the house they walked away from went up over $100,000. That’s why they were able to get their down payment back.
My tag line comes from a position that I take very seriously. This is going to be a VERY bad year - internationally. And runaway inflation is going to be a big part of it.
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