I recently wrote about my existential angst. This angst came about because all I am looking for are “megatrades” that you can build an interesting portfolio around. On of these megatrades was food inflation. A few years ago, I noticed China had become the biggest importer of corn in the world, and was moving from self sufficiency to import reliant in food. While Chinese imports are not as large as they were, they are still large enough to be the biggest single importing nation.
I thought this would lead to a sustained change in agricultural good pricing. This has not happened. Corn prices have round tripped.
But a funny thing has happened. Traded agricultural good prices have come down, but food prices have not. The Commodity Research Bureau Foodstuff Index is still well above 2019 levels.
As anyone who does grocery shopping will tell you, food prices have not really fallen. This is clear in CPI data. Food prices have levelled off, but not fallen.
So what is going on?
