Ripple Impact
High feed costs are rippling through supply chain to meat counters. Expect to pay more for meat as Food Inflation Deepens.
The Covid-19 pandemic upended food supply chains, paralyzing shipping, sickening workers that keep the world fed and ultimately raising consumer grocery costs around the globe last year. Now farmers — especially ones raising cattle, hogs and poultry — are getting squeezed by the highest corn and soybean prices in seven years. It’s lifted the costs of feeding their herds by 30% or more. To stay profitable, producers including Tyson Foods Inc. are increasing prices, which will ripple through supply chains and show up in the coming months as higher price tags for beef, pork and chicken around the world.
Feed prices “go up and down, and you tend to take the rough with the smooth,” said Mark Gorton, managing director at the British chicken and turkey producer Traditional Norfolk Poultry. “But when it rallies as much as it has, it starts to impact massively on the business.”
The last time grains were this expensive was after the U.S. drought of 2012, and meat prices saw a dramatic run-up. Now, meat is again poised to become a driver of global food inflation, and part of the intensifying debate over the path of overall inflation and exactly what central banks and policymakers should do to aid economies still working to recover from the pandemic.
Soybeans at a 7-Year High
Wheat Near a 7-Year High
Oats Near a 7-Year High
Orange Juice is Cheap
Coffee is Cheap
Sugar Highest in 4 Years
Lean Hogs Near Top of 7-Year Range
Live Cattle in Middle of 5-Year Range
Crude in a 6-Year Channel
Beef prices are one place I have not see pass-through yet as measured by sale prices, not day-to-day prices. I suggest buying meat on sale and freezing it.
Anyway, not to worry, “As Reported” Consumer Price Inflation Is Lower Than Expected Once Again
Mish
There is also another round of hidden price increases as package sizes continue to shrink. Have seen orange juice containers down to 52 fl oz, jars of pasta sauce down to 22 oz, and canned vegetables down to 14.5 or 14 oz.
It’s seems like a whole lot of things “crashed” in price over the last decade or so. But I don’t member seeing the price of anything go DOWN at the supermarket as a result. Shows you how un-free of a market we have. You would think that lower input costs and competition between brands would result in a price break for us. Unless these declines simply helped to offset their other expenses (rising labor?) and keep the prices more stable than they would otherwise have been, then it makes a little more sense.
“Something in the air” More methane, worse than Co2. The feedback loop is accelerating by the sounds of it. The melting permafrost is causing some big problems. Thought you’d be interested in this.
I went to junior high and high school in Houston. Saw snow once and it was a trace that was gone by 10 am. No one would build for this kind of tail event.
I got frostbite in Texas as a child. I predict it becomes less of a tail event as time goes on.
Its interesting that soybeans, wheat and oats are all at highs because they are giffen goods compared to expensive meat i.e. the more expensive meat is, the less it can be afforded, and diet substitution switches down increasing demand. Rice trending up over the last 4 years as well.
Its not just the dollar though, rice is trending up in all currencies. Canny Buffett buying up all that agricultural land. Global population growth is so high wow, I forgot only western countries reduced the family sizes.
Unimportant. Food prices are not included in core CPI.
Hence there’s no danger of interest rates going up for a while, just prices?
Inflation , deflation it’s all the hands of FEDs manipulation.
It’s OK. Food and energy Prices dont count when we talk about inflation. We even have a special CPI . It’s called CPI ex the bad stuff or food and energy
Over the long term, the CPI excluding food and energy is about equal to the full CPI. The only difference is that the full CPI goes up and down faster. The only time anyone ever brings out your argument is during times when food and energy are rising faster than other things. When, as last year, food and energy prices are falling, people conveniently forget about it. Neither makes sense. The two numbers are both just pictures of the economy, and are best viewed together, not as alternatives.
Just what the Fed and Central Banks want. For some reason they think rising prices is what’s needed to create jobs?
The question is will the backlogs causing it ease with the easing of restrictions and the growing vaccination programs? Probably in a year or two maybe, but Indoubt prices will fall again once they’ve gone up.
I think we’re a few years away from those charts needing a much higher vertical scale.