Expect to Pay More for Food as Grain Prices Soar

Mish

Corn and Soybean prices are the highest in 7 years. That has a ripple impact on feeding livestock.

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

Soybeans at a 7-Year High

Wheat Near a 7-Year High

Wheat Near a 7-Year High

Oats Near a 7-Year High

Oats Near a 7-Year High

Orange Juice is Cheap

Orange Juice is Cheap

Coffee is Cheap

Coffee is Cheap

Sugar Highest in 4 Years 

Sugar Highest in 4 Years
Milk Neutral, Down From Covid Spike

Lean Hogs Near Top of 7-Year Range

Lean Hogs Near Top of 7-Year Range

Live Cattle in Middle of 5-Year Range

Live Cattle in Middle of 5-Year Range

Crude in a 6-Year Channel

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

Comments (27)
No. 1-12
KidHorn
KidHorn

I think we're a few years away from those charts needing a much higher vertical scale.

Scooot
Scooot

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.

Sechel
Sechel

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

Too much BS
Too much BS

Inflation , deflation it's all the hands of FEDs manipulation.

davebarnes2
davebarnes2
  1. Seven years is too short a timeframe.
  2. You should be looking at constant dollar prices and not nominal.
Jojo
Jojo

Unimportant. Food prices are not included in core CPI.

bluestone
bluestone

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.

ColoradoAccountant
ColoradoAccountant

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.

Realist
Realist

I thought the topic was rising food and grain prices? But people are commenting on the cold weather in Texas, Cuomo, snow, windmills in Antarctica, and impeaching Trump. Is there something in the air besides the excess CO2? LOL. Just kidding. Had to add one more!

Anyway. It appears that dry weather in key growing regions of S. America and the US has hit corn and soybean production. Meanwhile demand has increased, in part because China is working so hard to rebuild their hog herds, after recent culling of millions of hogs due to African swine fever. So lower production, combined with higher demand and voila: higher prices.

Yep. If it isn't more dry weather, then it is more wet weather and floods; or more disease, or more pests. Agriculture seems to be in crisis more and more each year. It's almost as if there is something in the air that is causing all this
"record cold, record heat, floods, droughts, disease, and pests".

Oh well. Beats me. Good thing I can afford the higher prices.

Scooot
Scooot

“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.

JG1170
JG1170

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.

Call_me_Al
Call_me_Al

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.


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