Pro Perspectives 3/3/22

March 3, 2022

A predicted-future climate crisis has led to policymaking that has created an immediate energy crisis.
Next up, looks like food crisis.  
As you can see in this chart, food prices are near record highs already.  This is a squeeze on the standard of living for rich countries.  For poor countries, it's full blown crisis.  This time it looks like an uglier, more widespread impact is coming.    

Unfortunately, we know the energy input isn't improving anytime soon.  Nor is transportation (from both energy and supply chain disruptions).  Labor?  Labor costs are just in the early to middle innings of an adjustment.  We have a supply crunch in all three of these inputs. 
What about fertilizer?  Nitrogen, Phosphorous, Potassium:  All higher, nearly double the cost of this input for 2022.
Now we add in a supply shock from Russia and Ukraine – which combine for a quarter of the world's wheat exports.