How much does one cost loaf of bread cost is a debated issue this week. Perhaps the most interesting would be: how much will it cost this time next year?

Much, of course, depends politically on cost-of-living issues. My colleague Greg Jericho is of the opinion here that the election can be dominated by them.

And I got stabbed how the RBA can be enthusiastic see wages rise before raising interest rates, but real wages (after inflation) fell last year and could barely keep up with rising prices this year and next. (Take NZ as a warning sign.)

Anyway, Rabobanka bank specializing in commodities, this morning published its Australian Agribusiness Outlook. They describe 2021 as a “blue moon year”, implying that 2022 will not be a repeat.

Senior commodity analyst Cheryl Kalisch Gordon said:

There has been a combination of drought and adverse weather conditions in major growing regions of the world, high demand for storage in the face of potential food shortages as well as Covid-induced labor shortages which have had a impact on intensively produced agricultural products and transport.

Either way, Australia is expected to have another good year given that there are no water shortages (think giant cotton farms with their full dams in the Murray-Darling Basin).

Assuming some of these supply constraints ease overseas, there should be less stockpiling, and those global the prices of wheat, milk, meat, etc. should start to drop.

A key, however, will be the Australian dollar. Rabobank expects some “short-term slippage” before climbing later in the year. Since most products are priced in U.S. dollarsa weaker Australian dollar is not so helpful.

the US Federal Reserve will start raising interest rates from next month and since the RBA seems determined to be stoic, investors will likely push the Aussie down of its current Value of 70 US cents (because they are looking for a higher return).

Australian farmers (many of them multinationals) in other words, could divert more of their produce overseas… leaving Australian consumers to face higher prices for their proverbial liter of milk or loaf of bread.