by Bryan Perry

June 7, 2022

Although the Federal Reserve likes to focus its inflation algorithms on the core Personal Consumption Expenditures Index (PCE) that strips out food and energy, the headlines consumers see each day fan their outrage over food and energy prices. According to the U.S. Department of Agriculture, food prices are up 10.8% for the 12 months ending April 30, 2022, representing the largest 12-month increase since 1980.

The next Consumer Price Index (CPI) will be released this Friday, June 10, for prices during May. This will tell us if inflation is plateauing at the retail level. Then, on Tuesday, June 14, we’ll check prices at the wholesale level with the release of the Producer Price Index (PPI) report. It’s hard to fathom the numbers improving, but the latest narrative being pushed by financial media is that peak inflation was in April.

Consumer Price Index Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

While the rate of inflation might have paused a bit in May, inflation may get more daunting during June, given the surge in diesel and gasoline prices in just the past two weeks. This has raised serious doubts as to whether refineries can keep up with summer demand. The national average for gasoline and diesel hit another all-time high over the weekend at $4.82 per gallon for gas and $5.63 per gallon for diesel.

The total for weekly inventories of crude and refined fuels is getting smaller, and the market is becoming more panicked about rising demand during the upcoming summer travel season and the risk of a hurricane or refinery shutdown that could cripple critical infrastructure, sending prices higher still.

Gas prices get most of the attention, but trains and trucks run on diesel, where the recent spike in prices is almost guaranteed to be reflected in higher food and clothing prices, just for starters.

Weekly Retail Gasoline Prices Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The news of Saudi Arabia and OPEC+ nations willing to increase crude production to replace Russian oil supplies was initially received as bullish, as the EU moves to a full embargo of Russian exports in support of Ukraine and takes direct action against Russian President Vladimir Putin and the Kremlin; but once the details were out, it became clear that OPEC+ will only increase production by 0.648 million barrels per day (mb/d) in July and August, a 216,000 barrel gain over their already planned hike of 0.432mb/d.

Crude oil traders were not impressed with that small increase, given that fresh demand out of China – with its reopening of Shanghai and Beijing – and the weekly Energy Information Administration (EIA) data showing that crude stockpiles in the U.S. fell by 5.07 million barrels for the past week. WTI crude briefly traded down to $112 per barrel and then quickly reversed higher to close out Friday’s session at $119, the highest close since the spike in March in reaction to the initial Russian invasion of Ukraine.

Adding to summer costs, the latest special blend of gasoline meant to lower emissions can drive up costs by as much as 15 cents per gallon (according The main concern is that these elevated conditions will last through the summer, pushing prices for everything up, as freight, delivery, and logistics expenses soar. As a result, stock prices for some retailers tanked on news of excessively higher transportation costs, and conditions have now only worsened.

In several recent columns, I covered principles of investing in energy stocks, pinpointing where attractive dividend and distribution yields are. It is harder to find similar opportunities in the agriculture sector, places where investors can collect a fat yield in corn, wheat, soybean, or other food-related commodities. There are certainly a number of stocks representing fertilizer, seed, chemicals, processors, farms, and farm machinery where some decent yields can be found, but none in the spot commodities markets to speak of.

However, by utilizing a covered-call strategy, investors can participate in direct daily pricing of wheat, corn, soybean, sugar – or a combination of all four. For instance, the TEUCRIUM Funds are Exchange Traded Products (ETP) that are a subset of the $5 trillion ETF market. They use derivatives, in this case futures, collateralized by Treasuries, to gain access and exposure to key commodities.

Teucrium Funds Index

The use of these ag-related ETPs isn’t a perfect solution, but they have a high correlation to the markets they are tied to. The most-widely traded is The Teucreum Wheat Fund (WEAT), where daily volumes average better than three million shares and a 42% YTD return. News over the weekend of Russia blockading 20 million tons of Ukraine wheat exports from its ports is just another headline that fans the flames of global food security risks and the likelihood of persistently high prices going forward.

Teucrium Wheat Fund Index Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The current price of wheat is around $10.40 per bushel, trading as high as $12.75/bushel in early March and near that level again in May. Ukraine used to export 5-6 million tons per month and are now having to use trains and trucks to move less than 10% of that, between 300,000 to 500,000 tons per month, with that number possibly reaching one million tons in June. Even then, Russia is also stealing some of that wheat and routing it through Crimea to countries that don’t ask where it came from. It’s a real problem, because as I noted, plan B uses two modes of overland transportation that depend 100% on diesel fuel.

Unlike oil prices that are within 15% of their all-time high set in mid-2008, the price of wheat is 60% off its multi-year high set in 2012, caused by severe drought conditions in the U.S., so wheat has room to rise.

Selling out-of-the-money covered calls on wheat, corn, and soybeans is another creative way to have the winds of food inflation to your portfolio’s back. If you sell the July 15, 2022 $12 WEAT calls at $0.30 per contract, or roughly 2.8% in option premium, divided by the share price, with WEAT shares trading at $10.70, that is a nice premium for a six-week contract. If called away at $12 on July 15, it would generate a total return of 15% between capital appreciation and call premium collected. Imagine selling calls on these underlying commodity shares five or six times per year. Considering the macro conditions for wheat, corn, and soybean, this strategy has the potential to generate double-digit on income alone.

Like I said, to beat record inflation, investors should consider looking at alternative assets and be creative. It might make going to the grocery store just a little less painful.

All content above represents the opinion of Bryan Perry of Navellier & Associates, Inc.

Please see important disclosures below.

About The Author

Bryan Perry

Bryan Perry

Bryan Perry is a Senior Director with Navellier Private Client Group, advising and facilitating high net worth investors in the pursuit of their financial goals.

Bryan’s financial services career spanning the past three decades includes over 20 years of wealth management experience with Wall Street firms that include Bear Stearns, Lehman Brothers and Paine Webber, working with both retail and institutional clients. Bryan earned a B.A. in Political Science from Virginia Polytechnic Institute & State University and currently holds a Series 65 license. All content of “Income Mail” represents the opinion of Bryan Perry

Important Disclosures:

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.

ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:

  • ETF shares may trade above or below their net asset value;
  • An active trading market for an ETF’s shares may not develop or be maintained;
  • The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
  • The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
  • Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.

Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.

Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.

This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at or by requesting a copy by emailing All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades.  Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.

FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.