Friday, November 4, 2011

Dear Paul Krugman: Why Are Bacon and Egg Prices Soaring? (SFD)

SFD is the symbol for Smithfield, the nation's largest hog processor.
Paul Krugman is a New York Times blogger who vehemently denied that QE2, while it would raise equity prices, would have not effect on food costs.
Whiskey, tango, foxtrot.

From the Wall street Journal:
Meat Prices Continue Their Bull Run 
Here's food for thought: Despite being fed a steady diet of conflicting news about the global economy, consumers around the world are still tucking into pricey steaks and juicy pork chops with gusto.

U.S. exports of beef and pork are on pace to set records this year, and domestic demand is rebounding with surprising strength, indicating that slower growth world-wide and high unemployment at home haven't choked off appetites for some everyday luxuries.

Those consumer cravings have helped keep livestock futures consistently high this year, even as other commodities' prices have swung wildly. They have also pushed up domestic retail prices for many beef and pork products in recent years. The average price for sliced bacon in September was $4.82 a pound, up 34% from two years earlier, while uncooked beef roasts cost $4.52 a pound, up 15% over the same period, according to government figures....MORE
From Big Picture Agriculture:

USDA Reports Food at Home Prices Have Risen 6.3% During the Past Year with Eggs, Dairy, Beef and Oils Up Over 10%
The following graph is from a new USDA Report of the Food CPI and Expenditures. I have circled all categories that have risen by more than 5%.

You will note that 2009 prices were overall neutral since grocery stores have been trying absorb some of the cost increases for the ailing consumer. One could conclude that our ethanol policy in addition to higher fuel costs are underlying causes of the higher food prices, which exceed most other inflation categories, according to the Bureau of Labor Statistics.

The categories which have risen the most: meats, eggs, dairy, fats and oils, and fish and seafood.

Note: Bolded entries reflect changes from the previous month's forecast. Green arrows indicate an increase and red arrows indicate a decrease in the forecast from the previous month's forecast.

...MORE including some great links.