The price of breakfast shoots up 17% so far in 2022. Or rather, the indicator prepared by eToro does it, which equally weights eight raw materials that are usually common in the first meal of the day: cocoa, coffee, milk, oatmeal, orange juice, pork, sugar and wheat. Since the beginning of the Russian invasion of Ukraine, the rise of the so-called Breakfast Index is 6%.
All raw Materials that make up the indicator, the largest increase, of almost 43% since the beginning of the year, is that of wheat. It is particularly affected by the Ukrainian conflict, since Russia and Ukraine account for 24% – 12% each – of world exports of this cereal. In addition, both countries export 19% of the corn (2% and 17%, respectively) and 78% of the sunflower oil (28% and 50%), according to the US Department of Agriculture (USDA).
«The disturbances of the Ukrainian crisis in the Farm products they could be larger, more severe and longer lasting than the known energy risks. This year, the harvests in the Ukraine will be affected and so will be next year,” says Ben Laidler, market strategist at eToro, who also highlights the storage difficulty and the character perishable of cereals, something that does not happen with other raw materials such as oil or gas.
But the invasion of Ukraine by Russia has not been the trigger for price increases. Agricultural products were already becoming more expensive before the outbreak of the conflict, as reflected in the evolution of the Breakfast Index, and this trend is likely to continue over time.
Laidler highlights two main factors for basic products to continue to become more expensive. In his opinion, without the production of Russia and Ukraine, the sensitivity of prices to what happens in other exporting countriesWhat USA, Europe, Brazil or Argentina, who are experiencing their own climate, supply or cost problems. Likewise, it points out that prices will continue to rise due to the use of raw materials as financial assets in which to invest for protect yourself from inflation.
Wheat leads gains, but milk rises 22%
In addition to wheat, Chicago Mercantile Exchange (CME)the world’s largest commodity and financial derivatives market, the price of Pork Meat up 31% in less than three months. the one with the lcast almost 22% do. The increase in oatmeal it approaches 5%; while that of sugarof 4%, and that of Orange juiceslightly more than 2%, are lower. The only raw materials that are part of the Breakfast Index and that have become cheaper are Cafeteria and the cocoasince their prices have been reduced by around 2%.
The Russian invasion of Ukraine has caused a real earthquake that has repercussions on the bags. According to eToro data, the average return on the trading floor of agricultural producers and suppliers so far this year it is 17%, which contrasts with the 7% decline recorded by global equities. As an example, the market value of the machinery manufacturer Deere has grown 24% since January 1. The revaluation of the fertilizer company Mosaic is close to 78%.
In contrast, the average rise in food producers it is only 1%, a behavior that, although the Stock Market is better, is much lower than that of the producers. Mondelez, which produces everything from cookies to chewing gum, has fallen almost 7% since the beginning of the year.