Food inflation Bigger bomb than energy ▲

Polomny (Jun 19): a bigger political bomb than energy inflation — a K-shaped economy (60–70% on the lower leg), ~90% of US farmers struggling and >50% short on fertilizer/diesel inputs into a possible "historical El Nino" (hotter, drier US growing season); yields fall when inputs do (read Vaclav Smil on the hydrocarbon-to-crop-yield chain — barrels of oil/Mcf of gas → ammonia → urea). The northern hemisphere won't price it until the fall harvest, then "people are going to be going what"; "you're nine missed meals away from a revolution" (Sri Lanka 2022) — food up 20–50% into a Congressional election is a Western political wipeout and regime-threatening in Bangladesh/Pakistan. Plays the agriculture basket (DBA). Polomny (Jul 4): a possible super El Niño + high diesel/fertilizer into planting season + USDA’s 32.1M projected wheat acres (the fewest in 149 years) point to higher food prices into 2027. Paulo Macro (2026-MAR-08, back-fill): a wheat/fertilizer trade — wheat as the "geopolitical VIX" (it spikes in every major conflict from a low base), food export bans spreading (Kuwait first), and the 1973 template ($2.60→$5.20, then +50% more to $6.35 — per Stanley Kroll's trading diary); "strapped in for wheat upside" plus a few fertilizer plays. Jeff Currie (The Trevor Rose Podcast, 2026-AUG-20) puts agriculture in his top-two parting calls alongside precious metals: "I'd be looking at agriculture as well." The stack of supply hits — Ukrainian strikes on Russia (a major grain and fertilizer supplier), Black Sea grain shipping taken out, "the yields in the US were quite disappointing last week," fertilizer problems and a super El Niño. Evidence the shortage script is already running in softs: cocoa printed "a fifth largest move on record" and corn moved hard the prior day — while "the level of complacency is the part that probably surprises me the most." John Polomny (AIA Weekly Report, 2026-AUG-29): corn-belt farmers "say they are facing their worst crisis in 40 years as an explosion in diesel and fertilizer costs triggered by Donald Trump's Iran war pushes grain producers to the brink," with a super El Niño on top. Diesel is a refining problem, not a crude one — Middle East refineries destroyed, US refineries curtailed by regulation, Russian refineries struck until Russia suspended diesel exports — and even in low-tax South Texas beside the Corpus Christi–Beaumont complex "diesel was still $5.70 a gallon"; "diesel runs commerce. Diesel runs agriculture." Fertilizer has two broken legs: Middle-East nitrogen capacity (30% of world use) suspended and "the sulfuric acid problem has not been alleviated," which is how phosphate fertilizer is made. The market is starting to price it — DBA up at least 11 trading days straight — though he is candid that "how do you establish a position? That's the trick." Second-order: fewer producers means "higher prices or more cartelization," and with the US cattle herd at generational lows (screwworm among the causes) a populist import of 300,000 tons of beef suppresses the very price signal ranchers need to hold heifers back — "exacerbating the situation." 2026-AUG-25 (Adam Rozencwajg, Peak Prosperity, 2026-AUG-25) — a more two-sided read than the outright-bull case. Fertilizer is the clear channel: phosphate transits Hormuz, ammonia and urea are made from natural gas and Qatari LNG is disrupted, and sulfur went $300 → $1,100/t on a ~50% disruption of globally exported supply — "that price signal… makes sense. Not a lot has made sense to me in the energy markets yet" (Martenson), with Mosaic cutting phosphate output hard. "We didn't get enough fertilizer on the fields this year either, already." But he explicitly declines to call crop prices: a monster El Niño historically brings volatile weather and wetter summers, which against today's widespread drought, very low groundwater and dry soil "could actually be somewhat bearish for crop prices"; the drought is global (US, Europe, Black Sea, Brazil) so a wetter US could be offset by a drier Brazil, and a failed monsoon puts India in "big trouble." The real risk is complacency: 15–20 years of exceptional yields against rising protein-driven demand means the crop is priced to perfection — "it's a little bit like a trade where everyone's on one side of the boat… volatility in general I don't think is your friend in this type of a market." Position: fertilizer exposure up "a little bit, but… not yet… a full conviction." John Polomny (AIA weekly, 2026-SEP-12): pass-through confirmed on earnings calls — Kroger's CEO says diesel "flows through to impact the price of almost every product," PepsiCo guides higher input inflation in 2H26; "diesel plus dirt equals mining and agriculture" (Currie). Rich countries outbid poor ones, so no famine in the West. Jay Singh (2026-SEP-20): 'food companies are starting to raise food prices for the first time in many years.' Campbell's CFO says costs can't keep being cut, and Evercore cut CAG/KHC/CPB estimates on wheat, corn, resin and freight inflation. The pass-through comes from GLP-1 volume losses plus energy. US diesel is at $6.20 (+78% in 9 months; $8.14 in California), feeding trucking and then grocery prices. Consumers have spent about $140bn extra on fuel YTD, heading to $200-250bn by winter. He will read General Mills' call to gauge the price hikes.