Bank of America has warned that renewed geopolitical tensions, energy price volatility and adverse weather will continue to pressure consumer staples companies through the second half of 2026, with limited scope for price increases to offset rising costs.
The bank cited double-digit percentage swings in spot and forward commodity markets, driven by conflicts affecting trade routes, energy market fluctuations, agricultural disruptions from weather patterns and speculative activity linked to El Niño. Food prices remain elevated, with the U.S. Food Consumer Price Index rising 3.0% year-over-year in July, while food at home prices increased 2.7% annually but declined 0.1% month-over-month.
Energy costs have surged, with WTI and Brent crude oil prices up 46% year-to-date, U.S. diesel prices climbing 62% and regular unleaded gasoline returning above $4 per gallon. The increases reflect ongoing disruptions in the Strait of Hormuz and the Iran conflict. Agricultural markets have also seen significant gains, with wheat prices up 39% and soybeans up 23% year-to-date, largely due to trade route disruptions in the Black Sea region stemming from the Russia-Ukraine war.
Protein markets have softened recently, with chicken prices down 1%, lean hogs down 19% and cattle down 6% over the past month, reflecting expectations of increased supply from improved flock survival rates, Mexico border reopening and plant consolidation. Soft commodities have diverged sharply, with cocoa prices rising 102% over three months and 9% year-to-date, while coffee prices increased 12% over three months but remain 2% lower for the year.
BofA identified Conagra Brands, Campbell Soup, Pilgrim’s Pride, Sanderson Farms and General Mills as companies most exposed to cost inflation based on their cost structures, while confectionery firms, diversified protein producers, Smucker, Kraft Heinz and McCormick face comparatively lower inflation pressure.
