Breakfast at Tobin’s: Here’s a commodity that’s pumped 70pc in two years – your morning meal
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Well, you can walk away from a life of smashed avo right now, according to the latest research out of eToro the spot prices of morning staples makes the day’s most important meal the first one everyone should start skipping.
Seems that the cost of commodities which make up a typical breakfast (minus tequila) is up over 70% in the past two years, according to the latest Breakfast Commodity Index from the Josh Gilbert-endorsed social investing network eToro.
Even more calamitous for fans of the occasional agri-commodity, CBA’s director of agri-commodities Tobin Gorey warns “that the macro issues facing the world are still not priced in and that the overall bad macro numbers across commodities overnight aren’t going anywhere”.
“China’s highwire act trying to juggle a property bust, investor distrust while having COVID-lockdowns looks fanciful to many. Elsewhere, central bank’s aggression in wanting to reduce inflation is being pursued in full knowledge that this might cause recessions in many nations.”
eToro’s Breakfast Commodity Index looks at the current spots of a basket of nine boring but typical breakfast goods – wheat, sugar, cocoa, oats, pork, orange juice, coffee, milk and tea.
So it’s all rather unsurprisingly grim that those morning staples, combined with all the dire macro factors inflating the USD against other agri-exporting currencies (that’s us BTW), are making your morning juice much juicier, without improving the flavour.
eToro says OJ itself has enjoyed the steepest commodity price climb of any item in their breakfast basket, jumping 124% in two years, thanks to a particularly poor harvest in the US after dodgy weather and crop disease.
Since July 2020, Ben Laidler, global market analyst at eToro, says the index has risen by 71%, with the war in Ukraine, global supply chain issues and bad weather the key factors causing the upward trend.
“Commodity prices have been rising across the board since the Covid pandemic thanks to global supply chain chaos, and the war in Ukraine has only exacerbated this. Add this to poor weather impacting a number of crops in the last year, and you have a perfect storm of factors making the food on your breakfast table far more expensive to source and supply for food companies.
“Much of these price increases are already being passed on to consumers, through higher prices or smaller ‘shrinkflation’ sizings.”
Probably don’t need to make a big deal of this… but coffee prices have also skyrocketed.
Not like caffeine touches the sides of a usual morning here at Crackhead . The morning cup of blackest love rose 94% over the same period. Almost a double shot.
Again – poor weather (in major producing countries such as Brazil), ongoing global supply chain issues and the absence of a benign all-powerful diety concerned with the foibles of mankind, the major causes.
Not far behind and also proving the Christians et al wrong – the price of pork is up 80% since July 2020 – a trend thought to be the result of higher transportation and labour costs. And no God.
On the positive end of the good book – thank the Gods of Chocolate – cocoa has seen the merest of price rises, up an entirely absorbable 7%, ‘cos – thank the pagan lords of pandemics – there’s still a happy surplus of supply due to Covid-19.
Not helping any of this at all, according to Tobin Gorey, is that the macro worries just returned to the fore again on Tuesday.
The first and major headache here is how nuts the US greenback is behaving.
While it had a mixed Tuesday against the other agri-exporter currencies, Gorey says the greenback is “reaching totemic levels” for markets.
While it briefly traded at parity with euro last night and is at two-decade plus highs on the yen, the forlorn Aussie made “new near-term lows”.
Wheat futures’ prices slumped on Tuesday. Prices on the three big futures markets fell 4-5% and more on the day, dragged into the broader commodity sell-off.
“And wheat was also dragged lower by hefty falls in corn prices. Again we see that wheat cannot ‘step out’ of those broader macro forces,” Tobin said, ruining a peaceful Weet-bix for months to come.