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Is Food Inflation Coming Back?

Tyler Durden's picture


From Paul Mylchreest of Monument Securities

Coffee was up another 12% yesterday! After introducing myself to ADM’s Sugar trading team, I thought I’d better introduce myself to our Coffee team pronto, who were equally friendly I have to say. Feedback  - besides the dry weather in Brazil, there are also unsubstantiated rumours of a trading house getting in to trouble – which might not be surprising given the scale of the recent move. Here is the Coffee chart since the beginning of 2013.


Not sure if ADM trades Lean Hogs (must be out of Chicago if we do), but did you see them fly (!) during the last couple of days? Terrible.


We highlighted the CRB/BLS Spot Foodstuffs Index last week. It’s continuing to rise but still remains lower year-on-year at this point.

The question is whether this is the start of a broadly-based period of food price inflation?

So what about the Food Retailing stocks?

I was watching the S&P 500 Food & Staples Retailing sector yesterday. It rose 1.3% versus a 0.7% fall in the S&P 500.

After all their travails from intense competition and over-investment, maybe some food price inflation is just what the UK Food Retailers need...if they can pass it on in the current environment!

If we look back to a more “normal” period for these stocks, e.g. from 1996-2007, the Food Retailers did do well during periods of rapidly escalating food prices – although often with a lag.

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Thu, 02/20/2014 - 23:59 | 4460750 tmosley
tmosley's picture

Bachelor Chow

Now with flavor!

Thu, 02/20/2014 - 23:19 | 4460634 orez65
orez65's picture

We don't have to worry about food inflation, it is not included in the CPI!!!!

Let them eat iPads!

Fri, 02/21/2014 - 05:22 | 4461137 Wile-E-Coyote
Wile-E-Coyote's picture

Ever considered food inflation is keeping the CPI low, you know deflation in shit you don't need.

Thu, 02/20/2014 - 23:22 | 4460651 Goldilocks
Goldilocks's picture

Nexrad Weather Control: Tornado Creation 201A
http://www.youtube.com/watch?v=wVX8f58IxY0 (40:20)

Calgary Flood 2013: Geoengineered Disaster
http://www.youtube.com/watch?v=KwqlYfdiqxI (13:55)

Nexrad Weather Control: Creating Cloud Systems 101
http://www.youtube.com/watch?v=dslvUyZaSps (26:09)

Nexrad Weather Control - NOAA Aerosols Report Justifying Chemtrailing
http://www.youtube.com/watch?v=xJsfUZatymg (10:56)

Thu, 02/20/2014 - 23:28 | 4460671 Glass Seagull
Glass Seagull's picture




ADM does trade the hogs.

Thu, 02/20/2014 - 23:54 | 4460742 The Final Straw
The Final Straw's picture

Stack yer spuds. PMs = Precious Meals.

Fri, 02/21/2014 - 00:17 | 4460789 robertocarlos
robertocarlos's picture

You know they're lying when they have a market for lean hogs.

Fri, 02/21/2014 - 06:34 | 4461194 greatbeard
greatbeard's picture

>> lean hogs.

Jumbo shrimp, lean hogs, why not?

Fri, 02/21/2014 - 10:54 | 4461738 Tortuga
Tortuga's picture

I had a jumbo shrimp in the Phillipines a long time ago. They called it a prawn. When they put the plate down in front of my 2 night stand, I almost pulled out my knife for protection it was so big. Weighed over a pound.

Fri, 02/21/2014 - 10:52 | 4461725 Tortuga
Tortuga's picture

I know this will break ur heart, but lean hogs is the word the banksters use for BACON.

May they forever rot in hell.

Yoder canned bacon ain't so bad but has doubled in price, per case.

Fri, 02/21/2014 - 00:17 | 4460790 RaceToTheBottom
RaceToTheBottom's picture

I would like to projectile vomit all that expensive fresh food on Greenspam, the Bernank, and Old Yellen

Fri, 02/21/2014 - 01:17 | 4460904 Vooter
Vooter's picture

When did food inflation go away?

Fri, 02/21/2014 - 01:46 | 4460954 disabledvet
disabledvet's picture


Fri, 02/21/2014 - 01:47 | 4460955 disabledvet
disabledvet's picture

and '33 if I'm not mistaken.

Fri, 02/21/2014 - 02:04 | 4460982 Irene
Irene's picture

People will get sticker shock starting around Sept. with the new crop - or perhaps I should say "without the new crop."  Family's been in the food biz for 50+ years.  I've watched international food prices a long time.  Drought?  Staples can more than quadruple, and then they almost never come back down to where they were. Almonds, walnuts, dairy products, meat, produce - it's all going up.  Many price changes will be practically overnight.  One day you're buying old crop, and then the new crop doesn't come in and dat's dat.  All just in time for 2014 elections.

Fri, 02/21/2014 - 06:37 | 4461196 greatbeard
greatbeard's picture

>> All just in time for 2014 elections.

Oh good, then it's a short term problem?  If we switch to the red team (or is it switch to the blue team? I always get the two mixed up) they'll fix everything.

Fri, 02/21/2014 - 13:05 | 4462241 DaveyJones
DaveyJones's picture

everyone knows only one party can spontaneously generate groundwater 

Fri, 02/21/2014 - 05:13 | 4461134 sceptical_economist
sceptical_economist's picture

Product shrinkage is the real hidden food price inflator. It's not tracked by consumers and national accounts dont recognise the impact properly if at all.
This means foods contribution as a real component of total inflation is skewed to the downside. Useful to those interested in keeping a tight hold on monetary policy settings at zero rates. Not so good for those relying on inflation indexed wage rises.
But you kinda new that already.
Pass the crisps. I feel like a handful of salty air.

Fri, 02/21/2014 - 06:18 | 4461182 -NaN-
-NaN-'s picture

"Let them eat high fructose corn syrup"

Fri, 02/21/2014 - 06:25 | 4461189 laomei
laomei's picture

Look on the bright side, Americans at this point are basically mobile food banks.

Fri, 02/21/2014 - 07:10 | 4461224 BeansMcGreens
BeansMcGreens's picture

I just read yesterday an AP article on Yahoo the title of which was "Downside of low inflation: A weaker global economy". So get with the program an applaud higher food prices, its not only good for the US, but the whole wide world.

Fri, 02/21/2014 - 07:31 | 4461245 kenezen
kenezen's picture

The dollar is in danger of serious down side. Possibly below 80 on futures down to 72-75 by the fall of 2014. That will affect food far more. Food did rise dramatically after 2008. For the first four years food went up at 25% per year. Hamburger $1.29 in fall 2008 . In fall 2012 $3.25. Dollar is much more vulnerable now against other currencies even the weak one's our future contracts are pegged.  This press thing will scare everyone. Press freedom will affect the markets.   

Fri, 02/21/2014 - 07:44 | 4461257 Sufiy
Sufiy's picture

Gold Catalyst: U.S. Government Says 'No Inflation' As Food Prices Soar 

 Everybody who is living the normal life knows that all food prices are going up every year. So far inflation was exported to emerging markets and places like China with strict management of its currency valuation. Jim Rickards has explained it in the great detail in his book: Currency Wars. Now after The Currency Wars we are entering The Financial Wars. China has already cut its US Treasury holdings most since 2011 and bought the record amount of Gold. Watch Yuan to go higher now.The great inflation episode can be much closer than a lot of people think.Rising velocity of money will push inflation back into the Western system and Gold already smells that it is coming with its recent breakout.



Fri, 02/21/2014 - 07:49 | 4461259 Mad Muppet
Mad Muppet's picture

Learn to prep, folks. Long-term storage of foods using oxygen absorbers and mylar bags/canning/dehydrating. Having a large supply of basic ingredients that will last for many years is a great comfort in uncertain times.

 I have about two years worth put away, and now only buy what's on sale, excepting breads. Cuts my costs a lot. Then when I find a good deal, buy 15 or 20 of that item, or two cases.

Fri, 02/21/2014 - 08:07 | 4461278 greatbeard
greatbeard's picture

Dehydrated water, bro.

Fri, 02/21/2014 - 09:06 | 4461357 Rising Sun
Rising Sun's picture

Check for warehouses full of commodities owned by JPM or GS - they are typically found beside the warehouses of aluminum that are owned by JPM or GS.


Fuck you Barry!!!!

Fri, 02/21/2014 - 09:12 | 4461366 AdvancingTime
AdvancingTime's picture

We all must eat and prices under the pressure of changes in supply and demand can be a lot like a carnival ride. By this I mean fast and abrupt swings can take place and often we see prices go to unimaginable extremes. It would be better to say changes in "supply or demand", we should fully realize the market works best when at least one side of the equation remains somewhat stable.

Supply and demand has proven over time as the best method to control a good or fair balance between prices and supply. Free market systems that rely on supply and demand have a far better record of responding to what people want. A recent article I wrote dovetails with the idea that a drought in California may play havoc with food prices as modern society and restaurants try to cope.


Fri, 02/21/2014 - 10:48 | 4461716 Tortuga
Tortuga's picture

IMHO, Supply and demand applicability has been destroyed by the repeal of Sarbanes Oxly. Accomplished by the paid gigolos of the banksters, especially that slut former Senator Graham from Texas.

With their warehouses, tankers, faux bids by HFTs, and triple double secret insider trading.

Fri, 02/21/2014 - 10:15 | 4461525 yogibear
yogibear's picture

Devaluing the US dollar by billions a month while denying it. It doesn't take a economics PhD to be an accomplished liar.

It's just getting tougher to be stealthy about inflation. People notice when package sizes drop by 1/3, yet the price remains the same.

Fri, 02/21/2014 - 10:21 | 4461565 realWhiteNight123129
realWhiteNight123129's picture

Way to go tyler, Food prices can not be manipulated because they are not storable. if you try to corner wheat, you might have a pyrrhic victory of rotten food. CRB Food Index always leads on Silver prices, this is the best indicator of the appetite for Silver by people willing to preserve their ability to buy food.


Fri, 02/21/2014 - 12:01 | 4461989 Ghostdog
Ghostdog's picture

but an iphone costs me less who needs food

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