Expect Grocery Shock
With futures surging, Grocery Price Shock Is Coming to a Store Near You.
With global food prices already at the highest since mid-2014, this latest jump is being closely watched because staple crops are a ubiquitous influence on grocery shelves — from bread and pizza dough to meat and even soda.
“The relentless rise in prices acts as a misery multiplier, driving millions deeper into hunger and desperation,” Chris Nikoi, the World Food Programme’s regional director for West Africa, said earlier this month. It’s “pushing a basic meal beyond the reach of millions of poor families who were already struggling to get by.”
And commodities aren’t the only component in driving up the price of food. Higher freight costs and other supply-chain headaches as well as packaging can all add up. Food and beverage giants are already signaling they’re watching margins. Coca-Cola Co. has flagged higher costs in plastic and aluminum, as well as coffee and high-fructose corn syrup, the key ingredient in soda. Nestle SA, the world’s biggest food company, warned it won’t be able to hedge all of its commodity costs and it’s raising prices where appropriate.
Corn Futures
Wheat Futures
Soybean Futures
Live Cattle
Lean Hogs
Live cattle is at a 1-year high. The rest are at or near 7 to 8 year highs.
The Fed foolishly cheers this consumers sure don’t.
Mish
Charlie Bilello
@charliebilello
Commodity prices over last year…
Lumber: +265%
WTI Crude: +210%
Gasoline: +182%
Brent Crude +163%
Heating Oil: +107%
Corn: +84%
Copper: +83%
Soybeans: +72%
Silver: +65%
Sugar: +59%
Cotton: +54%
Platinum: +52%
Natural Gas: +43%
Palladium: +32%
Wheat: +19%
Coffee: +13%
Gold: +3%
7:15 AM · Apr 20, 2021·Twitter Web App
Even Mish is admitting food prices are rising now. (They’ve been rising for years.)
90% of us could stand to miss one meal a day. I’m excluding those who are already forced by circumstances to miss that meal.
I was in a discount grocery store the other day (Smart & Final) here in the SF Bay area, where I was forced to stand in an extended cashier wait line that ran into the bread aisle.
Inching along there, I noticed that most of the loaves of bread were at priced at least $3.49 for a standard 24oz loaf but the winner for highest price was a loaf of the brand OROWEAT (sic) labeled “Superior KETO bread” (20oz) on sale for $6.29 (regularly priced at $6.99!). Freaking amazing.
Usually I buy my bread at Grocery Outlet where a loaf of their own non-branded wheat bread sells for $1.69/24oz. Whew.
Not much different here in Florida.
My local Winn Dixie has named bread (Sara Lee, Arnold etc) for roughly the same price (3.49) and once in a while they run 2 for 5.00 specials. The no name brand Winn Dixie bread is 1.79 a loaf which is similar to your own no name brand.
That’s for white bread (what the kids will eat for sandwiches). If you want wheat or multi-grain be prepared to pay higher prices in 4+ range a loaf. At that price you don’t dare waste a single slice.
Bread used to be 10 cents the loaf back around 1935. What happened?
Nothing happened. It’s still 10 cents a loaf.
Provided you are paying with a 1935 silver dime that’s worth $1.73 as of today.
Over here the average baguette is 1.30 Euro. Whole wheat round-form sliced bread is about 4 Euro. That’s at the local patisserie.
You talk bread compare to jojo talks sawdust:-) I you understand what I meant.
Once you taste a baguette you can never go back.
I’m a simple person and a bit of an ascetic. I typically eat one toasted dry slice of my wheat bread with dinner at night along with a glass of H2O and I am perfectly happy. I keep the bread in the fridge, so a loaf lasts 2-3 weeks. 🙂
Take a look at agricultural land prices too. Drop coding and become a farmer.
My fallback plan. I bought my place in 2009, and I have most of the necessary gear for small scale farming. I just think it’s very challenging to make any money at it. So far every agricultural pursuit I’ve tried has been a loser……but at least I could feed myself if I needed to.
In the US if you want to farm you have to go big…and that doesn’t interest me. My wife’s Mississippi cousins lived on that treadmill for years. Soybeans and later triticale. They have (or had) big acreage. Always a bank loan hanging over your head, and most of the time either not enough rain or too much rain…..GMO seeds and roundup and lots of ammonium nitrate required to prosper….I don’t want it. The farmer cousin I liked the best died last year. Not sure if anybody is following his footsteps. He wasn’t that old, maybe a couple years older than I am.
I paid a hell of lot more than that per acre for my little place, but you always pay more here for live water….and for small holdings as opposed to hundreds or thousands of acres. I was worried it was a bad investment until this year. Now it looks just as as good as the rest of my RE, all of a sudden..
Is there oil under kit?
Under it.
No, but there is a lot of water for Central Texas. Almost as good. 🙂
I’m across the divide in the Brazos drainage basin, and the aquifer is the Trinity Aquifer, strangely enough…..but we had unlimited well water even in the 8 year drought.
West and south of here is the Edwards Aquifer….pretty much doomed to go dry in the next generation.
One of my daughters lives in Vermont with her husband on twenty acres of land planted with fruit trees plus a few other things. Before Med school she worked on a farm that housed people who were mentally deficient for two years and loved the farm life. She came back knowing how to milk cows, plant corn and wheat, drive a tractor and plough a field . She also picked cooking all manners of traditional farm cuisine. It was a big farm in rural Pennsylvania. She also learned how to shoot deer and to dress it afterward. She had that healthy glow of a farm girl.
Higher prices for Coca Cola and other added sugar products could help with the obesity epidemic.
Coke is woke. Support woke companies by buying their products.
Maybe, but I doubt it. People will just pay $1.50/2liter instead of $1.40.
Nah. Cigs are now $8-12/pack but people still buy them.
Inflation won’t be due to ag futures. Most soybeans are exported. A bunch of corn is to ethanol. Look at other inputs for food price increases. Grain represents so little of the actual cost. The increased grain prices has little to do with supply/demand. Farmers are making money hand over fist and getting paid quite well by USDA. Trump was a huge liberal in the farm industry. Which btw, most seed/chemical companies are also…..pharm companies. Politicians even Trump know who butters their bread.
“The increased grain prices has little to do with supply/demand”
I call bullshit.
“By 2023, U.S. soybean oil demand could outstrip U.S. production by up to 8 billion pounds annually if half the proposed new renewable diesel capacity is constructed, according to BMO Capital Markets.”
As stated from the previous links, check out the number of refineries converting or in construction for renewable diesel production. Climate change policies are most definitely causing fuel and food producers to compete for the same feedstock supplies.
“Brazil, the world’s top soybean producer and exporter, had no soybeans left to sell as of early February. The country did not export any soybeans in the first week of February, compared with almost 1 million mt in the same period last year, according to a foreign trade department report released Feb. 9.”
“The combination of poor harvest and strong demand led Canadian rapeseed stocks to fall to the lowest level in nine years at the end of 2020.”
You are wrong. Our stocks to use ratio doesn’t warrant the prices. It’s technicals and speculation driving much of it. Sorry to break it to you.
“China is buying up so much Canadian canola that traders fear a looming shortage”
Two more recent announcements in Canada, Viterra just announced the largest canola crush plant in the world in Regina and Cargill also announced a few days ago another canola crush plant by Regina for a combined crush increase of 3.5 million tonnes of canola.
“We continue to feel there will be added demand on top of food, with increased fuel demand,” said Kyle Jeworski, chief executive officer of Viterra’s North America operations, in an interview. “Our intent is to service both markets.”
One would expect to see continued high food prices into the future as renewable diesel begins to take a foothold. Many refineries are being constructed or converted to use corn oil, soy oil, canola oil, animal fats, wood wastes, etc as their feedstock as compared to crude oil.
Land use is definitely increasing for fuel production in competition with food production.
“The renewables shift could create stiff competition for limited stocks of cheap oils and fats, according to the energy consultancy Stratas Advisors. Any price increases would also impact the soap and detergent industry, which relies on animal fats as raw materials for products such as cationic surfactants.”
Oops forgot link for post:
For whatever reason link keeps disappearing???
Anyway another link on renewable diesel and effects on food prices
“A renewable diesel boom could also have a profound impact on the agricultural sector by swelling demand for oilseeds like soybeans and canola that compete with other crops for finite planting area, and by driving up food prices.”
Looking at the chart it looks like there has been zero agricultural commodity inflation for 11 years!
Time frame is too short in your charts.
I always go to https://www.indexmundi.com/commodities/?commodity=corn&months=360 for my corn prices
Ban derivatives trading if you truly want commodity prices to reflect true supply and demand.
Ban futures? The futures market came about to allow farmers to offload price risk to speculators in the 19th century but I think you already know that.
It allows farmers to get the market price, as opposed to the old way, which is for them to sell the grain to the elevator for whatever they can get.
Are you tired of Covid ? Covid isnt tired of us yet.
BIG question : are the jabs working ? They won t tell us the truth , for the time being …it wouldn t be politically correct to do so …..
They seem to be working here in the UK. We’ll have to see what happens with new strains.
Certainly isn’t working here in France.
I’d got the impression not many had been vaccinated there yet or has that changed?
We are up to about 10% fully vaccinated I think but supply dropped off recently. The AstraZeneca vaccine was supposed to take up the slack but with the bad publicity few people want it and are waiting for the RNA vaccines. It’s the same everywhere on the Continent I hear.
You’d think the millions we’ve vaccinated would instil some confidence.
Despite the lack of enthusiasm for it on the continent I see the EU are still intent on suing AstraZeneca. Which is all for show of course, more waste of their money and resources.
They want to say it is all AstraZeneca’s fault and that the mean Brits kept the nice, civilized Continentals from getting vaccine. Perfide Albion! Most people here know that the EU screwed it up and wish they were where the UK is today.
Not in the USA:
Coronavirus cases aren’t budging — even after vaccinations doubled
22 Apr 2021
Thinking about it, the vaccinations don’t stop transmission or it’s not known to what extent, but are meant to reduce the severity of the virus and minimise hospitalisations and deaths. My comment about the UK was really about this, I think we’re still getting quite a few new cases although I haven’t looked at any stats.
I’m praying we get a another Covid lockdown here in CA during the summer. That should seal Newsom’s recall fate nicely.
The inflation all points to increased shipping costs. The problem is the fed stuffed US consumers pockets and, of course, most people didn’t save it for a rainy day. Or use it to pay rent. They bought stuff made in foreign countries. And the stuff has to be shipped here. Hence, a jump in shipping demand. Eventually things will return to normal, but it may take a few more months for the free gov’t money to be fully spent.
On the plus side won’t this mean government hand outs to farmers will drop drastically?
Looking for a place to get back into the GLD fun trade….the dollar is still in a short term downtrend, but gold seems to get smacked disproportionally every time the dollar threatens to turn up. Gold might have bottomed here at 1769, but I’m not convinced, yet. The first stop (below) today is at 1763, according to the technicians.
There is no such thing as inflation…..Nothing to see here……..Move along…….
Like you I think that the Fed is foolish to push for inflation. It would be better for them to push for higher wages (if they could). However farmers and ranchers have been hurting through years of inflation on costs but lower prices on their products. Most of the developed world spends a small percentage of their income on food. This will hurt the developing world much more.
Pushing for higher wages is the same thing as pushing for higher inflation.
Whether the cost of something rises because of raw material or wages is irrelevant. It only matters that the cost rose.
What the fed (and everyone) should be pushing for is a rise in productivity (producing more for less). That’s the only thing that benefits people.
Yes to this! Rising productivity is the only things that helps.
Costs are irrelevant if productivity stays the same (unless there is a concentration of wealth to a few…thanks FED!).
Productivity, not costs, are where efforts should be directed. The massive wealth gains of the industrial age are due 100% to increased productivity due to mechanization.
I look forward to the robotic age to come. It will be exciting to see the productivity gains from that.
OT, but…
No silver bullets, but some measurable reduction of infection rates via a small study from Singapore in workers barrack….
The following were the infection rates for trialled medications:
Vitamin C: 70 per cent infected (or 433 out of 619 participants)
Hydroxychloroquine: 49 per cent infected (or 212 out of 432)
Throat spray: 46 per cent infected (or 338 out of 735)
Ivermectin: 64 per cent infected (398 out of 617)
The confounding issues also stand–were their different behaviors between the groups, face mask wearing, attempted distancing, etc..
And, for@Jojo , there are no overweight people in a Singapore workers barracks. What would the rates be in a more sedentary culture?
Vitamin C and zinc: 47 per cent (or 300 out of 634)
A question, for those who don’t want to be told to wear masks, or object to getting a vaccine, will they happily take a drug or spray their throat daily with an iodine compound just because someone says so.
I saw something awhile back about nasal rinses with baby shampoo added being protective, which actually makes sense, since the shampoo would help dissolve the lipid particle, much like washing your hands. I saw no harm in it, and since I do daily nasal rinses for my allergies, I added some baby shampoo. I didn’t get covid, but I have no way to know if that helped.
Nope.
“Coca-Cola Co. has flagged higher costs in plastic and aluminum, as well as coffee and high-fructose corn syrup”.
Well, that’ll hit a lot of Americans where they live, for sure.
It will definitely hit them in their waist.
Maybe drinking less soda due to increasing costs will help with the obesity epidemic in America.