Tuesday, May 27, 2008

Why are pizza and bagels still so expensive?

I have a question. Usually we are talking about how sticky gasoline prices are - you know, when oil prices go up so do gas prices and when oil goes down gas slowly eases lower.

But now I see something rotten in bakery-ville. Wheat prices have come down 40% - you read that right - since March yet the price of pizza, bagels and any other baked good you can name hasn't budged!

What's worse? Washing it down with milk that hasn't really come down in the supermarket but is down some 35% in the futures market since last summer (nonfat dry milk).

Everyone, including me, talks about food price inflation but that may be old news. The DBA ETF, which tracks corn, wheat, soy and sugar, has been trending lower all year. I'm not going to call for a bear market in food by any means, especially when the news is full of global shortages, but this is certainly some contrary evidence I have to feed into my market opinion machine.

So far, it just weakens my inflation and rising interest rate argument but does not reverse it.

1 comment:

Doug said...

I think the market is simply it's own beast...I'm avoiding more and more the folks who give reasons for particular moves on a given day. God only knows and He's not talking... ;)