Breakfast gets pricier

Register
Mar 24, 2014

Over the past few months, basic commodities that make up the bulk of Americans’ morning meal have risen sharply in price. Although the reasons for the price increases vary, most people will be likely to see higher food costs at the breakfast table in the coming months.

Breakfast beverages like coffee and orange juice have had some of the sharpest increases in recent months, gaining nearly 50% since last fall. Drought conditions in Brazil have been reducing coffee and orange juice production; Brazil is the world’s largest producer of both oranges and coffee.

Meat prices have been rising as well, led higher by pork, which is trading near all-time highs. Bacon and sausage are becoming more expensive as a result of a disease that is estimated to kill off as much as 10% of this year’s piglets, sharply reducing the pork supply.

Even cereal eaters have not been spared the price increases. Milk has gushed higher as drought in Western states cuts into cows’ production. Meanwhile, breakfast cereal staples like oats and wheat have each risen by over $1 per bushel in recent months. Wheat gained amid concerns about dry weather in the Midwest affecting this year’s crop and fears that the Ukrainian crisis could restrict exports from Eastern Europe, while oats jumped as logistical issues prevented movement of the grain from Canadian farms to American consumers.

Ethanol Boils Over

Despite falling gasoline prices over the past month, some drivers may be seeing higher pump prices due to a sharp increase in ethanol pricing. Ethanol is commonly blended with gasoline to boost the octane power of the fuel.

Since late January, ethanol futures have risen more than a dollar per gallon, trading Friday for $2.82 per gallon, the highest price in over two years. Most of the US ethanol is produced in Midwestern corn-producing states, but is predominantly consumed in the heavily-populated East Coast, requiring train transportation to get the fuel to consumers.

Prices have been rising as rail shipments of the fuel slowed to a trickle this winter. Snowstorms have reduced rail volumes significantly, and many trains have been diverted to carry more lucrative goods, like crude oil.

Longer term, some analysts expect prices to decline as the glut of Midwestern ethanol reaches demand markets, but warn that the process will take time.

 

Opinions are solely the writer's. Walt Breitinger is a commodity futures broker in Valparaiso, Ind.  He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.

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Alex Breitinger

 

Breitinger & Sons, a division of Paragon Investments

Commodity Futures Brokers

 

219.707.5332

800.411.FUTURES (3888)

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This is not a solicitation of any order to buy or sell, nor does it provide any recommendations in regard to the market.  Information contained herein is believed to be reliable, but cannot be guaranteed as to its accuracy or completeness. Past performance is no guarantee of future results or profitability. Futures and options trading involve substantial risk of loss and is not suitable for all investors. Clients may lose more than their initial investment.

 

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Comments

holysee

Cut off food stamps completely and the dregs will stop buying bacon and making it too expensive for my fat a$$.

pntbutterandjelly

FYI: Food and energy are NOT calculated into the national inflation rate. Is that because they don't want us to know how high it really is as our incomes stagnate or are reduced?

KnuckleDragger

That and it keeps them from having to pay higher COLAs to Social Security and military retirement recipients.

grumpy

It also makes it hard to compare inflation over different years, although if you search you can find sites that have kept comparisons of the products that used to be used so you can still make comparisons. You just have to type it into your favorite search engine. Gov't doesn't like it when you can judge them to their past. That is the federal gov't that changes what is used to calculate the inflation rates.

Remember you deserve the gov't you vote for.

pntbutterandjelly

re. KnuckleDragger; I didn't know that nor had I thought about it. With that new information...it would seem as if the Feds are putting a financial hurting on many who need or deserve the most assistance. bummer (again)
"What is right will seem wrong and what is wrong will seem right."

pntbutterandjelly

re. KnuckleDragger; I didn't know that nor had I thought about it. With that new information...it would seem as if the Feds are putting a financial hurting on many who need or deserve the most assistance. bummer (again)
"What is right will seem wrong and what is wrong will seem right."