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The bogus "no inflation" mantra that we keep hearing makes me sick. Ag commodities such as corn (you know, the ethanol craze) are driving food prices higher.
Going forward, I would think that Bio-ag companies like Monsanto (MON) will do very well. If ethanol is truly the holy grail for our energy issues, Monsanto will engineer their seeds to get greater yields out of an acre of land.
As you are well aware, the "core" inflation numbers always come with the disclaimer, "ex-food & energy". They must think we're stupid. Last week, the CPI rose 0.4% and PPI (ex-food & energy) rose the same amount.
Corn prices have risen about 70% in the past six months. I believe there is a correction on the horizon, but we cannot ignore that higher prices will be passed on to consumers.
Here are some products that will be affected if corn prices remain high;
Corn Starches:
1) Industrial Uses
Adhesives, Cardboard, Construction Materials, Detergents, Paper, Textiles, Plasterboard.
2) Food & Drug Uses
Antibiotics, Aspirin, Baked Goods, Candies, Condiments, Mixes & Instant Preparations, Processed Meats, Puddings.
Corn Syrups:
1) Industrial Uses
Adhesives, Animal Feed, Bookbinding, Laminated Building Products, Enzymes, Leather Tanning, Lubricating Agents, Metal Plating.
2) Food & Drug Uses
Baby Food, Bologna and Hot Dogs, Chewing Gum, Cookies & Crackers, Dessert Mixes, Fruit Drinks, Canned Foods, Cereals, Medicinal Syrups, Pickles, Salad Dressings, Seasoning Mixes.
3) High Fructose Corn Syrups
Carbonated Beverages, Fruit Fillings, Cereals, Frostings, Ice Cream & Frozen Desserts, Pancakes, Pastries, Relishes & Sauces, Syrups & Dessert Toppings.
Dextrose
1) Industrial Uses
Antibiotics, Enzymes, Coatings, Insecticides, Organic Solvents, Plasticizers, Shampoo.
2) Food & Drug Uses
Brownies & Baked Goods, Canned Fruits, Cheese Spreads, Cured Meats (such as bacon), Dessert Mixes, Intravenous Solutions, Jams & Jellies, Soda Fountain Preparations, Marshmallows, Soups.
3) Fermentation & Other Chemical Products
Ethanol, Citric Acid, Lactic Acid, Essential Amino Acids, Sugar Alcohols.
So, I guess the government is right! If you exclude (don't use) food and energy, there is no inflation, and everything is fine.
