Prepare For A 15% Food Price Surge, Rabobank Warns

Tyler Durden's picture


The record US, and global, summer drought has come and gone but its aftereffects are only now going to be felt, at least according to a new Rabobank report, which asserts that food prices are about to soar by 15% or more following mass slaughter of farm animals which will cripple supply once the current inventory of meat is exhausted. From Sky News: "The worst drought in the US for almost a century, combined with droughts in South America and Russia, have hit the production of crops used in animal feed - such as corn and soybeans - especially hard, the report said. As a result farmers have begun slaughtering more pigs and cattle, temporarily increasing the meat supply - but causing a steep rise in the price of meat in the long-term as production slows. "Farmers producing meat are simply not making enough money at the moment because of the high cost of feed," Nick Higgins, commodity analyst at Rabobank, told Sky News. "As a result they will reduce their stock - both by slaughtering more animals and by not replacing them." Somewhat ironically. food prices are now being kept at depressed prices as the "slaughtered" stock clears the market. However once that is gone look for various food-related prices to soar: a process which will likely take place in early 2013, just in time to add to the shock from the Fiscal Cliff, which even assuming a compromise, will detract from the spending capacity of US (and by implication global) consumers.

The "mass liquidation" of animals - which Rabobank said will pick up pace in the beginning of 2013 - will contribute to food prices hitting new highs.


The cost of pork is expected to rise at the fastest pace - by 31% by the end of June next year - while beef costs could increase by up to 8%.


"This record cost of meat and dairy will combine with already-high crop prices to increase food prices by 15% by the middle of next year," Mr Higgins added.


This would see food prices reach their highest level on record, up by 175% compared to the year 2000.


But the report stressed that the current situation is very different to the crisis of 2008 – in which food stables of the world’s developing economies, like wheat and rice, were severely affected.


The bank's research follows official figures that showed inflation had slipped back to 2.5% in the UK - closer to the Bank of England's inflation target of 2%


But Mr Higgins warned that next year’s food price rise could push inflation in the UK higher, and so further away from the Bank's target.

And who will be the biggest loser once the market starts purchasing pork futures with both hands? Why the same country whose central bank resolutely refuses to join the global easing carnival, precisely for fears of what may happen to pork prices: arguably the most critical component of the Chinese inflation picture. Recall that when it comes to measuring inflation, not everyone is like the US, with a food weighing of just under 8% of CPI: India and China are far more susceptible to food price shocks, as the food component of CPI is 47% and 31%, respectively.

Furthermore, in China pork is by far the most consumed "red meat." A surge in the price of pork as global inventories plunge could well result in the kind of food protests that toppled various regimes in the MENA region in the spring of 2011. But don't worry: this too, like everything else, will be fixed by the central planners. After all, the VIX by then will likely be in the low-single digits at current rates of artificial volatility collapse, and all shall be well.

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Wed, 09/19/2012 - 12:06 | 2811451 Acet
Acet's picture

Long pigs, Bitchez!

Wed, 09/19/2012 - 12:09 | 2811469 JPM Hater001
JPM Hater001's picture

I hope this doesnt effect the availabilty of my Kosher bacon.

That would really piss me off.

Wed, 09/19/2012 - 12:15 | 2811483 vast-dom
vast-dom's picture


Wed, 09/19/2012 - 12:20 | 2811503 madcows
madcows's picture

What about corn and wheat and soy?  Can I eat those?  B/c those are in short supply, too... and used to feed all sorts of animals, like chickens.  Which means the cost of eggs, dairy, meat and GRAINS are ALL going up.  They have you fucked 6 ways from sunday.

Wed, 09/19/2012 - 12:25 | 2811526 Precious
Precious's picture

Fuck foodstuffs, gas and commodity prices.

What we really need in America is a gay marriage amendment to the US Constitution.

Wed, 09/19/2012 - 12:32 | 2811551 camaro68ss
camaro68ss's picture

Fuck it, who needs to buy food when the bernake can just print me some food.

Wed, 09/19/2012 - 12:35 | 2811559 francis_sawyer
francis_sawyer's picture

    "Pork bellies ~ I knew it"


Wed, 09/19/2012 - 12:58 | 2811677 GetZeeGold
GetZeeGold's picture



You dollar!


Wed, 09/19/2012 - 13:29 | 2811814 Ruffcut
Ruffcut's picture

Is bernanke howard sterns next "pig vomit"?

Wed, 09/19/2012 - 13:14 | 2811754 Abitdodgie
Abitdodgie's picture

Some guy has printed a lower recever for an AR15  from a 3d printer, so food printing will soon be possible

Wed, 09/19/2012 - 14:15 | 2811962 krispkritter
krispkritter's picture

Yes! They just have to figure out how to get Soylent Green to spool up and hit the right melting point. They you can print that Thanksgiving turkey and don't even have to cook it! Gives new meaning to the phrase "Come and eat kids, Mom just made dinner!"

Wed, 09/19/2012 - 20:40 | 2813464 pipefit
pipefit's picture

I heard the i-phone 5 has an ap for that, lol........

Wed, 09/19/2012 - 16:16 | 2812690 Pooper Popper
Pooper Popper's picture

SUPER! Lets have a Parade!!!

Wed, 09/19/2012 - 16:18 | 2812695 madcows
madcows's picture

Beer summits,


green energy,

GLBT marriage,

a budget,

fat farms for kids,

expensive vacations for moochelle,

golf outings

anything but addressing the real problems.

Wed, 09/19/2012 - 16:42 | 2812788 Mysteerious Roo...
Mysteerious Rooshian Vooman's picture



L.O.L. Made me laugh! +1


Wed, 09/19/2012 - 12:31 | 2811545 vast-dom
vast-dom's picture

meat causes corn/grains to go up. 

Wed, 09/19/2012 - 12:47 | 2811611 kralizec
kralizec's picture

No, that's the water-wasting corn-based ethonol complex!

Wed, 09/19/2012 - 17:50 | 2812924 DaveyJones
DaveyJones's picture

more corn is produced for ethanol now than for food and, of course, it's negative net energy. And, of course, most corn and soy are GMO monsters. Other than that, our food systems are A OK. Oh, except for water tables, petroleum fertilizers, top soil erosion......

Wed, 09/19/2012 - 12:53 | 2811653 WillyGroper
WillyGroper's picture

How can you have any pudding if you don't eat your meat?

Wed, 09/19/2012 - 13:20 | 2811781 Ruffcut
Ruffcut's picture

Fuck you, "I STILL WANT IT!"

Wed, 09/19/2012 - 12:16 | 2811489 WALLST8MY8BALL
WALLST8MY8BALL's picture

Brick Top: "You're always gonna have problems lifting a body in one piece. Apparently, the best thing to do is cut up the corpse into six pieces and pile it all together.And when you got your six pieces, you gotta get rid of them. Cause it's no good leaving it in the deep freezer for your mum to discover. Now, is it? Then I hear the best thing to do is feed them to pigs. You gotta starve the pigs for a few days, then the site of a chopped-up body would look like curry to a pisshead. You gotta shave the heads of your victims and pull the teeth out for the sake of the piggies digestion. You could do this afterwards, of course, but you don't want to go sifting through pig shit, now do you? They will go through bone like butter. You need at least 16 pigs to finish the job in one sitting, so be wary of any man who keeps a pig farm. They will go through a body that weighs 200 pounds in about eight minutes. That means that a single pig can consume two pounds of uncooked flesh every minute. Hence the expression "as greedy as a pig"."

Wed, 09/19/2012 - 12:35 | 2811560 camaro68ss
camaro68ss's picture

I dont know what bothers me more, you know all this information, or knowing I have to wait a few more months before dancing with the stars is back on.

Wed, 09/19/2012 - 14:41 | 2812210 ParkAveFlasher
ParkAveFlasher's picture

Snatch +1

Wed, 09/19/2012 - 14:43 | 2812221 Overfed
Wed, 09/19/2012 - 13:32 | 2811829 Red Heeler
Red Heeler's picture

Throw in a flock of chickens to speed up the process.

Wed, 09/19/2012 - 16:25 | 2812714 James
James's picture

I live in Fl.

We have wild pigs.

Should chit go mad max I plan on using those pigs for disposal.

FYI, New Zealand rabbits are a good source of meat.

Protein Bitchez

Wed, 09/19/2012 - 12:18 | 2811495 FL_Conservative
FL_Conservative's picture

Eat mor chickin'.

Wed, 09/19/2012 - 12:39 | 2811581 francis_sawyer
francis_sawyer's picture

The eyes of the piglet in that foto are definitely saying that...

Wed, 09/19/2012 - 12:18 | 2811499 slaughterer
slaughterer's picture

All commodities futures will be manipulated by the NYFED by an army of NYU grad students to paint the picture that QEternity is not inflationary.   Artificial commodity price suppression will frustrate all supply/demand analyses calling for price rises in major commodities until commodity bulls like Jim Rogers are squirming like a pig.   

Wed, 09/19/2012 - 13:02 | 2811692 fonzannoon
fonzannoon's picture

The situation you describe seems to be total control, not manipulation. It's only manipulation if it eventually comes to an end by natural brute force of the markets.

Wed, 09/19/2012 - 13:09 | 2811732 LMAOLORI
LMAOLORI's picture



You say po ta to she says po tat o 

And Now, Documentation (Alleged Rigging Against Investors)

Wed, 09/19/2012 - 12:33 | 2811556 cbxer55
cbxer55's picture

Long Pork, bitchez!

Wed, 09/19/2012 - 13:05 | 2811711 1100-TACTICAL-12
1100-TACTICAL-12's picture

Got 4 ready to butcher, Waitin on some cold weather..

Wed, 09/19/2012 - 16:48 | 2812808 Umh
Umh's picture

Long freezers.

Wed, 09/19/2012 - 12:45 | 2811608 MiltonFriedmans...
MiltonFriedmansNightmare's picture

India?  China?  Haven't you gotten the memo yet. Simply exclude the volatile food and energy sectors from the indicies; problem solved.

Siwwy wabbits.

Wed, 09/19/2012 - 13:45 | 2811883 Mike7.62
Mike7.62's picture

Long Pigs. Funny, that's what the cannibals in New Guinea call human flesh. Soylent Green anyone?

Wed, 09/19/2012 - 15:08 | 2812362 MillionDollarBoner_
MillionDollarBoner_'s picture


Things are gonna be THAT bad?

Wed, 09/19/2012 - 12:06 | 2811452 SHEEPFUKKER

I guess I may have to eat my gold then if food prices spike. 

Wed, 09/19/2012 - 12:08 | 2811462 Acet
Acet's picture

Maybe now it's a good time to stock up on tins of freeze dried meat ...

Wed, 09/19/2012 - 12:46 | 2811617 kralizec
kralizec's picture

Damn skippy!  Buy in bulk!

Wed, 09/19/2012 - 13:04 | 2811706 Cast Iron Skillet
Cast Iron Skillet's picture

no iPad?

Wed, 09/19/2012 - 12:06 | 2811453 Cognitive Dissonance
Cognitive Dissonance's picture

Beans, bullion and bullets. The order changes a bit, but the mix does not.

<Honey, more beans.....I'm begging you.>

Wed, 09/19/2012 - 18:59 | 2813236 intric8
intric8's picture

Yeah those items will be necessary because we'll all be hiding out in caves with canned goods and a shotgun at the rate things are going

Wed, 09/19/2012 - 12:07 | 2811458 Robot Traders Mom
Robot Traders Mom's picture

Thank God Facebook stock certificates are edible...


I don't want my son to starve! 

Wed, 09/19/2012 - 14:11 | 2812031 Hippocratic Oaf
Hippocratic Oaf's picture

I like my FB rare, with a side of GRPN and a touch of ZNGA


Wed, 09/19/2012 - 12:07 | 2811460 vmromk
vmromk's picture

Hey Bernanke, some hungry mobs are going to be looking for a fall guy very soon.

Wed, 09/19/2012 - 12:29 | 2811519 Dr. Engali
Dr. Engali's picture

The angry mobs will be directed to some other fall guy who ,ironically, will have nothing to do with pork.

Wed, 09/19/2012 - 13:56 | 2811938 V in PA
V in PA's picture

The price of food is so high because people are hording gold. It's their fault. "Confiscate the gold so we can eat" will be the cry.

Wed, 09/19/2012 - 12:08 | 2811463 JPM Hater001
JPM Hater001's picture

I thought pork was the other white meat?

Or was that Romney.

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