Global Food Prices are Rising: Will it Affect the Stock Market?

Let us take this opportunity to analyse the relationship between rising in Food Prices and its effect on inflation, interest rate and ultimately on the Stock Market.

As per FAO (Food and Agriculture Organization) and as shown in the chart (from https://www.statista.com/chart/20165/un-global-food-price-index/) below for the rise in Food Prices it is getting clearer that the Food Prices are on the uptick. If we take the base for Food Prices as 100 as of 2014-2016 average Food Prices level then the Food Prices around the world is 16% dearer most recently.

Now as per common sense, if the rise in Food Prices continues to the upside, then it may create the feeling (or actual?) of so-called “Inflation” which might influence (or force?) the central banks (especially the Fed) to think of raising the interest rates. There is a wonderful quote on this “hike in interest rate” from Ben Casselman as below:

This means no one (including the Fed?) actually know for certain that whether this rise in Food Prices will eventually result in rising interest rates across the globe which may affect the Stock Market and most importantly when. One better approach parallel to this rise in Food Prices is the present status of the all-important Stock Market Index called the S&P 500.

Global Food Prices are rising and S&P 500

The S&P 500 is possibly (because we need to know at the end of this week whether last week high was a swing high or not) creating a Double Top at the price levels of 3,963.88 and 3,988.85. If the index S&P 500 does create a double top at the end of Friday (26.03.2021) week close and its low is taken out then from our proprietary Index Trading Strategy the immediate Short side of the index S&P 500 can be as below from the effect of rising in Food Prices:

1. 3,887.52

2. 3,855.88

3. 3,824.49

4. 3,819.57

5. 3,779.81

6. 3,753.22

7. 3,747.41

8. 3,722.90

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Written by

Partha

He actively trades the same strategies he teaches, specialising across Forex, Equities, Commodities, Indices, Cryptocurrencies, and intraday markets. Under his leadership, N P Financials has become a globally recognised trading education and proprietary trading organisation, earning multiple national and international awards for regulatory excellence, educational depth, and long-term trader outcomes.

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Written by

Partha

Partha Banerjee is the Founder, Principal Trader, and Director of N P Financials Pty Ltd, one of Australia’s most respected ASIC-regulated proprietary trading and trader-training firms and an AFSL holder. With decades of experience across multiple market cycles, Partha is known for his disciplined, structure-first trading approach, grounded in transparency, risk management, and real-market execution.

He actively trades the same strategies he teaches, specialising across Forex, Equities, Commodities, Indices, Cryptocurrencies, and intraday markets. Under his leadership, N P Financials has become a globally recognised trading education and proprietary trading organisation, earning multiple national and international awards for regulatory excellence, educational depth, and long-term trader outcomes.