I can’t remember who gave me this idea, but sometimes I troll through the raw PPI data to get ideas on pricing power.? Here’s a list of the top 50 rising items in the PPI:
| Code |
2011 Px Increase |
Commodity Name |
| WPU01130102 |
125.3%
|
Dry pinto beans |
| WPU01710802 |
109.8%
|
Checks and undergrades |
| WPU023307 |
90.7%
|
Liquid raw whey |
| WPU01130101 |
87.0%
|
Dry pea beans |
| WPU01130104 |
84.9%
|
Dry pink beans |
| WPU011301 |
84.1%
|
Dry vegetables |
| WPS017108 |
74.5%
|
Breaker stock and checks and undergrades |
| WPU01210105 |
71.3%
|
Hard amber durum wheat |
| WPU01710801 |
70.1%
|
Breaker stock |
| WPU01130215 |
68.4%
|
Lettuce |
| WPU01130103 |
68.0%
|
Dry great northern beans |
| WPS0181 |
64.5%
|
Alfalfa hay |
| WPU01830121 |
61.9%
|
Cottonseed |
| WPU01830111 |
45.2%
|
Peanuts |
| WPU02230101 |
44.9%
|
Haddock |
| WPU01830161 |
44.6%
|
Sunflower |
| WPU431105 |
41.7%
|
Other nonresidential buildings, gross rents |
| WPU4423 |
39.7%
|
Truck trailer, utility trailer, and RV rental and leasing |
| WPU06380304 |
39.6%
|
Calcium channel blockers and other vasodilators |
| WPU06220209 |
39.4%
|
Titanium pigments |
| WPU05320108 |
37.8%
|
Ethane, gas mixtures and other natural gas liquids |
| WPU02350303 |
37.3%
|
Bulk liquid milk products, including feed grade |
| WPU058103 |
37.0%
|
Other petroleum and coal products, including coke oven products, n.e.c. |
| WPU01190104 |
36.9%
|
Walnuts |
| WPS058 |
36.1%
|
Asphalt and other petroleum and coal products, n.e.c. |
| WPU058102 |
34.8%
|
Asphalt |
| WPU012201 |
34.5%
|
Barley |
| WPU01130105 |
33.3%
|
Dry peas |
| WPU021302 |
32.5%
|
Other milled rice and byproducts |
| WPU033701 |
32.5%
|
Greige cotton broadwoven fabrics |
| WPU06520136 |
32.5%
|
Urea |
| WPS065201 |
31.3%
|
Nitrogenates |
| WPU06520135 |
31.2%
|
Synthetic ammonia, nitric acid, and ammonium compounds |
| WPS0271 |
30.5%
|
Animal fats and oils, made in slaughtering plants |
| WPU07130371 |
29.8%
|
Flat rubber and plastics belts and belting |
| WPU02210126 |
28.3%
|
Boneless beef, fresh/frozen, inc. ground bulk/patty |
| WPU01710705 |
28.0%
|
Eggs, small |
| WPU0283 |
27.2%
|
Processed eggs, liquid, dried, or frozen |
| WPU01130404 |
27.0%
|
Round red potatoes |
| WPU06140341 |
26.8%
|
Ethanol (ethyl alcohol) |
| WPU067906 |
26.7%
|
Gum and wood chemicals, including wood distillation products |
| WPU0613020T |
26.4%
|
Inorganic acids, inc. hydrochloric, sulfuric acid and other |
| WPU11490202 |
26.3%
|
Ball valves |
| WPU091502141 |
26.2%
|
Uncoated paper grocers’ bags and sacks |
| WPU091502142 |
26.1%
|
Uncoated paper variety bags and pouches (merchandise) and shopping bags |
| WPU58F101 |
26.1%
|
Automotive fuels and lubricants retailing |
| WPU013103 |
26.1%
|
Slaughter vealers |
| WPS0652 |
26.0%
|
Fertilizer materials |
| WPS013201 |
25.8%
|
Slaughter barrows and gilts |
| WPU01190101 |
25.8%
|
Pecans |
A few notes:
- Checks and Undergrades are chicken eggs of low grade.
- Breaker Stock are eggs that are slightly better, but not good enough for retail.
- Greige = Un-dyed
- Vealers = Calves, used for veal
- Barrows and Gilts = Hogs
When I look at the top 50 risers, I think the following are in demand:
- Specialty hydrocarbons
- Dried peas, beans, nuts, etc.
- Fertilizer
- Eggs
- Some types of meat
Most of it boils down to a demand for food and energy.? These are very basic things, and to me indicate that there is demand for the basics.? I think this demand is global, as middle classes arise over much of the globe, food and energy will become more expensive.? A pity that the FOMC does not consider what people need to be material to their monetary decisions, despite the fact that food and energy have always had higher inflation rates, and there are better ways to deal with volatility (median, trimmed mean).
But what about the bottom 50?
| Code |
2011 Px Increase |
Commodity Name |
| WPU1022 |
-10.7%
|
Primary nonferrous metals |
| WPU10230102 |
-11.3%
|
No. 2 copper scrap, including wire |
| WPS0292 |
-11.5%
|
Soybean cake, meal, and other byproducts |
| WPSSOP1300 |
-11.9%
|
Crude fuel |
| WPU01830131 |
-12.0%
|
Soybeans |
| WPU10250237 |
-12.1%
|
Copper and copper-base alloy sheet, strip and plate |
| WPU10250239 |
-12.2%
|
Copper and copper-base alloy pipe and tube |
| WPUID6222 |
-12.2%
|
Unprocessed fuel |
| WPSSOP1320 |
-12.3%
|
Nonmanufacturing industries |
| WPUID62222 |
-12.5%
|
Unprocessed fuel to nonmanufacturing industries |
| WPU022301 |
-12.7%
|
Unprocessed finfish |
| WPU0111 |
-12.9%
|
Fresh fruits and melons |
| WPU11510115 |
-13.6%
|
Portable computers, laptops, PDAs and other single user computers |
| WPU01130228 |
-14.2%
|
Green peppers |
| WPU10230101 |
-14.5%
|
No. 1 copper scrap, including wire |
| WPU11510114 |
-14.6%
|
Personal computers and workstations (excluding portable computers) |
| WPU441 |
-14.7%
|
Passenger car rental |
| WPU102102 |
-15.4%
|
Copper ores |
| WPU01110226 |
-16.8%
|
Cranberries |
| WPU091207 |
-17.1%
|
High grades wastepaper (pulp, substitutes & deinking) |
| WPUSI01102B |
-17.1%
|
Berries |
| WPU01130212 |
-17.2%
|
Carrots |
| WPU02230502 |
-17.4%
|
Crabs |
| WPU01130226 |
-17.5%
|
Endive |
| WPU13710116 |
-17.6%
|
Other gypsum products |
| WPU012203 |
-18.1%
|
Oats |
| WPU06380105 |
-18.5%
|
Hormones and oral contraceptives |
| WPU084904 |
-19.3%
|
Sawn wood fence stock, wood lath, and contract resawing and planing |
| WPU0531 |
-19.3%
|
Natural gas |
| WPU091202 |
-19.5%
|
Mixed wastepaper |
| WPU01130222 |
-19.6%
|
Broccoli |
| WPU115202 |
-20.5%
|
Parts and components for computer storage devices |
| WPU01130223 |
-20.7%
|
Cauliflower |
| WPU01130211 |
-20.8%
|
Cabbage |
| WPU01210103 |
-21.3%
|
Soft white wheat |
| WPU01210104 |
-22.2%
|
Soft red winter wheat |
| WPU0912 |
-22.2%
|
Wastepaper |
| WPU09120801 |
-22.9%
|
Exports (all grades) |
| WPU02230131 |
-23.2%
|
Flounder |
| WPU01110109 |
-25.1%
|
Tangelos |
| WPU02230133 |
-25.4%
|
Pollock |
| WPS091203 |
-25.5%
|
Corrugated wastepaper |
| WPU01110101 |
-27.0%
|
Grapefruits |
| WPU01130216 |
-28.2%
|
Dry onions |
| WPU01130213 |
-31.3%
|
Celery |
| WPU01130234 |
-35.1%
|
Cucumbers |
| WPU01130218 |
-44.5%
|
Snap beans |
| WPU01130231 |
-44.6%
|
Squash |
| WPU011103 |
-64.2%
|
Melons |
| WPU01110301 |
-77.6%
|
Cantaloupes |
One note: Finfish = real fish, as opposed to shellfish
When I look at the bottom 50 risers, I think the following are not in demand:
- Melons
- Many other fruits and vegetables.
- Low grade paper
- Some fish and shellfish
- Copper and other base metals
PPI File 12-2011
The above file contains all of the data for all categories in the PPI report.? My view of the data tells this story, which is consistent with what I have been writing for the last eight years: Resources are in short supply relative to capital and labor, for the most part, but not absolutely.
I still think that energy is an investable theme, agriculture and fertilizer may be so also.
