The war with Iran is causing upheaval in the commodity markets. The early volatility has seen an increase in the price of corn and soybeans, but it has also included sharp setbacks. Even more concerning is the risk presented to U.S. farmers and consumers as the conflict in the Middle East drives energy and fertilizer prices higher. During his press conference on Wednesday, Federal Reserve Chairman Jerome Powell says the impact is concerning.
While oil price spikes immediately drove up headline inflation, which includes volatile energy prices, those costs eventually “leak” into core inflation, Powell said. It strips out energy and food prices as the cost of producing other goods rises. For corn and soybean growers preparing for spring planting, that ‘wait and see’ approach means keeping a very close eye on how headline inflation, rising fuel, and fertilizer expenses will impact their bottom line in the coming weeks.
For more information, visit federalreserve.gov.
