As I previously said in multiple posts, both Everything Shortage and Briefings, there is no solving the supply chain problems short-term, and the shift in tone is clear now, most experts (as usual 3 months behind) expect the supply issues to go well into 2023.
Economic contagion is a thing, and it hit Chinese steel manufactures, collateral damage from the Evergrande troubles.
Complex societies and our current civilization (and any really) can’t function without cheap energy, and as I laid out months ago, European energy costs would affect industry and production of critical materials, and here it comes. Imagine a country allowing that to occur because it believed and relied on the words of corrupt pharmaceutical companies. As a counter example, the Chinese getting out of their energy difficulties for now.
And as I said many times, grain and feed yields will be diminishing in the coming 12 months, which will make animal protein and products more expensive, therefore impacting overall costs and inflation. Farmers better find alternative ways to raise yield without relying on current fertilizer supply chain 1. (Yes, I have a few).
Last and most important. China using Hybrid Warfare tactics to slow down decoupling and hurting everyone else while at it. They have been using the virus as an excuse to lockdown the most important regions the last 4 months. And nobody is the wiser.
The Next Wave of the Supply-Chain Crisis Is Building
Those expecting a quick end to the supply-chain crisis are going to be sorely disappointed.
Port back-ups, trucker shortages, factory closures, and shortages of raw materials are huge contributors to this current wave of the crisis. But a second wave looms on the horizon. This wave will be harder to identify, and too many companies focused on just the current crisis, without appreciating the risks of what’s coming next.
Bottom line: At some point in the not-too-distant future, these and other companies that are facing a mountain of debt will need financing (or refinancing, as the case may be), and many will be unable to raise liquidity at affordable rates, if at all. 2
https://www.trucknews.com/transportation/all-federally-regulated-truck-drivers-to-face-vaccine-mandates-in-2022/1003155704/
China’s Costs of Aluminium Pulled Back from Highs on Lower Prices of Electricity and Raw & Auxiliary Materials
Most aluminium plants, especially those using in-house generated power, suffered losses from late October to November due to the surging electricity costs and high prices of raw and auxiliary materials. The shortage of thermal coal caused the costs of thermal power to soar, and the aluminium prices stood low in November, which further aggravated the losses. 4
Egg-flation Sends Down Shares of Top U.S. Producer Cal-Maine Foods
Egg prices are rising and more food inflation could be forthcoming amid continuing supply chain volatility in 2022, according to Cal-Maine Foods Inc., the biggest U.S. producer.
The company, which accounts for about a fifth of the U.S. market, said egg prices in its fiscal second quarter rose 12% from the previous year amid a recovering food service sector and supply-chain issues. Unfavorable crop weather also made corn and soy feed for chickens more expensive. Cal-Maine earnings, reported Tuesday after market close, missed analysts’ expectations, sending shares down the most in over a year. 5
Fertilizer Stocks Head for Best Year Since 2009 As Prices Soar
https://www.bloomberg.com/news/articles/2021-12-21/u-k-fertilizer-shortages-loom-as-importers-hold-off-purchases?cmpid%3D=socialflow-twitter-energy&utm_content=energy&utm_campaign=socialflow-organic&utm_medium=social&utm_source=twitter
https://www.barrons.com/articles/the-next-wave-of-the-supply-chain-crisis-is-building-51640274503
https://www.bloomberg.com/news/articles/2021-12-29/alcoa-to-curb-aluminum-output-in-spain-after-energy-costs-soar?sref=Kf0MXoXH
https://www.hellenicshippingnews.com/chinas-costs-of-aluminium-pulled-back-from-highs-on-lower-prices-of-electricity-and-raw-auxiliary-materials/amp/
https://www.bloomberg.com/news/articles/2021-12-29/top-u-s-egg-company-forecasts-more-inflation-as-shares-plunge?utm_medium=social&utm_campaign=socialflow-organic&cmpid=socialflow-twitter-business&utm_source=twitter&utm_content=business
https://finance.yahoo.com/news/fertilizer-stocks-head-best-since-180115147.html
My two goats are a running joke in my suburban family, but just wait till ribeyes go to $25/lb. Then they’ll laugh less as I get my egg chickens in the backyard.
The inflation due to CBs pumping + the relative prices adjustments due to hindered qtys of retail, tools & electronics is going to go out of the charts. I’m guessing we’re going directly into soviet style groceries where you can choose amongst very few things and better get them now before they’re gone. Funny seeing everything and knowing the cards are laid down while Europeans don’t even understand what it is to live with persistent inflation.