Inflation in the US rises to 8.6% annually in May, the highest in 40 years

Inflation in the United States gained strength again in May according to the CPI consumer price index, which scored 8.6% in 12 months, the highest since December 1981, according to data from the Department of Labor released on Friday.

In the month-over-month comparison with April, the increase in prices was 1.0%, while between March and April the increase was 0.3%. The figure is higher than expected by analysts. Gasoline in particular had an increase of 4.1% in May, in addition to housing, plane tickets and vehicles that also rose in price.

Soy with the highest rise in 10 years

Soybean prices reached their highest level in nearly 10 years on Thursday amid nervousness in the market, concerned about lower than expected production while demand remains high, especially due to increases in energy prices. .

On the Chicago futures market, a bushel of soybeans (about 60 pounds) for July delivery reached $17.8400 for the first time since September 2012, very close to the all-time high of $17.9475.

The margins left by crushing soybeans, that is, grinding for the extraction of their oil, are currently very high, explains Jake Hanley, of Teucrium Trading, due to the increase in energy prices, since soybeans are used massively to produce biofuels.

Consequently, this increases the demand for soybeans and pushes prices up.

"The transformers look for soybeans and sometimes they must increase the offer" to get it, said Jason Britt of Central State Commodities, which stimulates the cash (for immediate delivery) and futures markets.

For the expert, this rise is also related to the sustained pace of US exports, especially to China. "They import US soybeans and also buy as much as they can from Brazil."he highlighted.

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According to brokerage CHS Hedging, despite the lockdowns that paralyzed the economy of several Chinese cities, in particular Shanghai, soybean imports in May were higher than their level in the same month in 2021.

Nervousness also grips traders on the eve of the publication of the monthly report from the US Department of Agriculture (USDA), which will update estimates of yield, production and inventories.

According to CHS Hedging, the Department of Agriculture should revise down its estimate of world inventories for the 2021/22 campaign, which is explained in part by a slightly lower production in Brazil, the world’s leading producer.

Globally, "some fear that the production figures for the ending season are wrong"accounting for larger volumes than they actually are, added Jason Britt.

For Jake Hanley, the soybean market is suffering from a domino effect, further accelerating the price rally, as prices rise above technical floors triggering new purchases.

If prices continue to rise in the short term, the manager recalls that the forecasts of the Department of Agriculture show a net rise in production (+12%) for the 2022/23 campaign, and of reserves for the end of the period (+16%), which would return to the levels of the end of the 2020/21 campaign.

"That will end up weighing on prices" Jake Hanley anticipated.

Paradoxically, soybeans do not benefit other oilseeds such as palm oil and Canadian transgenic rapeseed (called canola), weighed down by the restart of exports

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