Weekly column: Ceres retrograde grains and a shift in the harvest

Review

“The large spike in the producer price index (PPI) this morning shows that inflation is coursing through the economy, even if it hasn’t been felt by consumers yet. Given how benign the CPI numbers were on Tuesday, this is a most unwelcome surprise to the upside and is likely to unwind some of the optimism of a ‘guaranteed’ rate cut next month,”

—Chris Zaccarelli, Chief Investment Officer, Northlight Asset Management, “Instant View; US Producer Prices Surge More than Expected,” Reuters, August 14, 2025.

The latest iterations of the CPI and PPI reports were released this week and showed a stark contrast in the data versus market participants’ expectations. The CPI showed a modest increase that was much in line with what economists expected. The data suggest that inflation is relatively stable at the consumer-based level. The PPI, however, came in significantly hotter than what most analysts thought.

The differences in the data raise some interesting questions about tariffs and Fed policy moving forward. For example, producers and businesses could have front-run the initial tariff announcements by the Trump administration and secured a stockpile of raw materials/products critical to their output. This would have allowed them to maintain reasonable pricing to the consumer over the last few months. But as these producers work through inventory, the latest PPI numbers suggest a sharp rise in replacement costs. How soon will the bulk of these increases be passed down to the consumer? If people think things already cost more now, can you imagine the look on their faces in 6-12 months?

This begs another question: Have large businesses and manufacturers (maybe even exporters) been shielding the consumer by eating a large portion of the price increases stemming from these tariffs? One might ask why they would even do that. Perhaps it could be that they perceive this as just short-term financial pain before a more favorable trade deal is worked out. In this case, they certainly wouldn’t want to risk losing market share to a competitor by charging more. But what if a better deal doesn’t come? At some point, these companies and businesses have to answer to the shareholders and investors.

Lastly, can the Federal Reserve still entertain a cut to short-term interest rates in the face of a leading inflation indicator ripping higher? The CME FedWatch tool still seems to think so, assigning a 92.6% probability of a rate cut at the September 17 meeting following the immediate release of the PPI numbers on Thursday. By Friday, that percentage had fallen a bit more to 84.8%. What will be interesting, though, is that we will get another look at the CPI and PPI the week before the next Fed meeting on September 10 and 11. What if the PPI continues to run hot? What if the CPI starts to creep upwards as well? How might financial markets react to a surprise “HODL” (for the Bitcoin peeps) by the Fed?

The stock markets in the US sure took the higher inflation numbers in stride, finishing the week with modest gains. The bigger story might be the fact that the DJIA made a new all-time high on Friday, negating the bearish divergence with the S&P and Nasdaq we had been watching over the last few weeks. Gianni will have an updated outlook for what this could mean for the stock market moving forward in the MMA Weekly Report due out this weekend. The European and Asian markets mostly followed in the footsteps of the US markets, with the notable outperformer being the Nikkei. It was up almost 6% for the week.

In commodity land, the Crude Oil market ended the week about 3% lower, but it is getting late in its primary cycle and is due for a bottom soon. The $60/barrel level might start to look attractive in the not-too-distant future. Metals were fairly quiet this week, all things considered. Gold continues to grind near this year’s highs, refusing to break down. With Trump meeting with Putin in Alaska, we could see some movement in this market come Sunday evening, depending on reports of how the meeting between the two heads of state went. I am happy to say that one of the best-performing commodities markets this week was Soybeans. Thanks to a bullish USDA report released on Tuesday, Soybeans were up over 6% at one point. This wasn’t a complete surprise, as we have been hunting a primary cycle low in this market for the last few weeks. We even got our MMA Monthly Report subscribers long at the low of the day on Tuesday!

In crypto land, Bitcoin and Ethereum each made new highs last week, but both experienced an aggressive reversal on Thursday, forming an outside down price bar. This may have marked at least a major cycle top, but the overall trends are decidedly bullish in the crypto space right now.

Short-term geocosmics

Ceres is not generally the first celestial body one thinks of when pondering the solar system. It is classified as the closest dwarf planet to Earth and resides in the asteroid belt, located between Mars and Jupiter. Ceres is named after the Roman goddess of agriculture and the harvest, so it should not come as a shock that it exerts influence over the grain markets. After all, a statue of her likeness sits atop the Chicago Board of Trade Building, which is where grain futures markets were first traded.

The grain markets have been shown to mark important inflection points around the time Ceres stations retrograde and direct. This again looks to be the case with Soybeans forming a primary cycle low on August 6, just three trading days ahead of Ceres turning retrograde on August 11. Corn and Wheat look like they might have formed lows as well on August 12 and August 14, respectively, but they have not been confirmed yet. The sharp rally in Soybean prices this week was a welcome relief to many producers who will be starting harvest in about 30 days.

The grain complex as a whole has certainly NOT participated in the inflationary rise that many other commodity markets have had. In fact, the situation is completely opposite to what was talked about earlier, with businesses experiencing higher input costs while trying to keep product costs passed to consumers in check. As I wandered through the cereal aisle at my local grocery store this week, I was dumbfounded to see that a box of Corn Flakes now costs almost $8.00 (admittedly, it was the “family” size)! It should come as no surprise that the main ingredient in Corn Flakes is indeed Corn. But here is the real kicker, with the price of Corn currently languishing near 5-year lows, how should a box of corn flakes be almost 100% higher over that time? Money is being made here, but it certainly is not by the producers, of which I am one!

As mentioned in a previous column I penned, this underperformance of the grain complex may be slowly shifting, with the operative word here being “slowly”. Since bottoming in August 2024, Corn, Soybeans, and Wheat have been largely building a base. We may be experiencing a successful test of those 2024 lows now, right on Ceres stationing retrograde. If they can hold the line here, the coming Saturn/Neptune conjunction in February 2026 may start to offer some much-needed relief, at least in terms of price.

If you have the opportunity to support producers of locally-grown food in your community, please do so! Not only are the products they offer healthier and higher in nutrients, but most work really hard to produce something of beneficial value for another human being. I am willing to bet that most of these people do it because they genuinely care about others. We need more of that kind of mindset in the world today!