Brace yourself, 2013 will be the year of above normal food price inflation. Normal yearly inflation is about 2.8%, the USDA projects steady food price increases between 2.5 – 3.5% for the remainder of 2012.
The crippling drought that continues to have a firm grip on more than half of the country will cause an increase in food prices. The USDA states that milk, eggs, beef, poultry and pork prices will all be affected by the drought, which has pushed up prices for feed. Beef prices are expected to see the biggest jump at 4 – 5% and slightly lower increases for poultry, pork, milk and eggs into 2013.
The drought has recently sent the prices of corn, soybean and other commodities soaring (as stated in an earlier PIERS blog) as fields dry out and crops wither across much of the country’s midsection. Corn prices went from $572.88 per metric ton at the end of June to $814.30 a ton this week; soybeans $1,453.75 to $1,696.62; and wheat $702.63 a ton to $915.50. Since corn is used to fatten up livestock, some farmers are selling their stock rather than pay to feed them, while some meat companies are choosing another option – have corn imported from Brazil.
According to a recent Financial Times article citing PIERS data, “The situation – analogous to Saudi Arabia importing oil – underscores how anxious buyers of corn, particularly the livestock, poultry and ethanol industries, have become, as 88% of the domestic crop struggles in drought-hit regions… Records from PIERS, a ports database, show 2008 was the last year foreign bulk corn arrived on the U.S. mainland and then it was in the form of seeds, not animal feed.”
How will these raising food prices and depressed supply of corn and grain affect U.S. imports and exports of these commodities? Register to learn more about how PIERS Data can show you the details behind every U.S. waterborne shipment in near real-time.