Thursday, April 14, 2011

It's Getting Wacky: Price Inflation Will Result in Apple Juice Futures Contracts

The expanding price inflation, which the Federal Reserve seems to not see, is about to result in the  Minneapolis Grain Exchange launching a futures contract in apple juice concentrate.

WSJ reports:
The Minneapolis Grain Exchange Inc. is gearing up to list a futures contract for apple-juice concentrate, a molasses-like substance that is mixed with water to create the apple juice that lines most supermarket shelves.

Plans for this financial instrument are being finalized as prices across a range of commodities are hitting records and companies are clamoring for ways to hedge against volatility in their raw-materials costs.
Bottom line: Prices are getting much more volatile at the wholesale level, with a strong upward bias. When you see the volatility expanding to hit consumer-only goods such as apple juice versus oil which can be used in both the capital-goods and consumer-goods sectors, you know that serious consumer price inflation is not far behind.

1 comment:

  1. If there's a bright side to be seen in all of this, it's that the market is creating investment opportunities like this, which will help to alleviate some of the burden.

    Of course, once investment opportunities such as this are created, it's open season for politicians to put forth election-season legislation that will limit/confiscate the profits of those that are successfully maneuvering the coming consumer goods bubble.