Conflicting Data

It is no secret that higher prices for agricultural commodities is typically bullish for inputs, especially fertilizers. However there seems to be a disconnect based upon recent data that has been published.
Over the last several days the Wall Street Journal and the U.S. Department of Agriculture have published data regarding food and agricultural commodity pricing. These data points seem to conflict with each other. On one hand the USDA has indicated that favorable growing conditions will likely lead to a record agricultural production. Corn is further hampered by an increase in corn stocks of 39 percent over last year, which is pushing the price of corn to four year lows. However the Fed is concerned that inflation associated with food is growing. The price index for all food items is expected to increase by three percent over last year.
These data seem to contradict one another. Lower cost of grains should translate to lower cost for all food items. But certainly the data isn’t bearing this thesis out.
To find out more about this and the effect that this might have on fertilizer projects, contact Schlumpberger Inc .

U.S. Corn Production Food Inflation

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