Futures Report: Food costs more than dough | Business
Supply chain issues, growing consumer demand, soaring energy and transportation costs, and labor shortages are driving up consumer prices. Price tags are particularly visible in grocery stores and restaurants, with animal products costing the most.
Wholesale prices increased more than 8% between August 2020 and August 2021, according to the United States Department of Labor.
Other countries are also feeling the effects. Food in Russia increased by around 2% from August to September this year, and Albanians are protesting in the streets over expensive grocery stores. Inflation is also affecting the UK, where severe shortages of natural gas are pushing up prices.
A bushel of corn for delivery in December was trading at $ 5.30 Friday afternoon. December wheat brought in $ 7.33, while November beans brought in $ 12.43.
Green acres are the sellers’ market
With the increase in food demand, the price of agricultural land also increases. While the United States has a significant amount of land compared to other countries, less than a fifth of American land is suitable for agriculture.
According to the USDA, the average price per acre of farmland has increased 75% over the past 15 years. Farm real estate is particularly hot in the Midwest right now. Cropland in Iowa, for example, sells for between $ 13,000 and $ 15,000 an acre, with some farms selling for over $ 20,000 an acre.
This has caught the attention of investors, including foreign investors, who buy American properties. Meanwhile, all of this is also impacting the housing industry and the preservation of the wilderness as they cannot afford to shop.
Cotton blows higher
Food, fuel, and shelter have been in the headlines for months, but cotton – a source for clothing – has recently surged even larger than these markets. Cotton for December delivery this week hit $ 1.1648 per pound, the highest level in 10 years.
Bad weather – both too dry in some areas and now too wet at harvest time – has contributed to supply threats. Yet the main reason for the rally appears to be linked to President Donald Trump’s ban on wearing clothes in China’s cotton-growing area. For decades, China bought raw cotton from the United States, using cheaper labor, and then selling us clothes at prices we could never match our labor costs. higher work.
Since the ban, China’s import demand for US cotton has increased 83% year-over-year, according to the USDA. On Friday afternoon, December cotton was trading at $ 1.1046 per pound.
Opinions are solely those of the writer. Walt Breitinger is a commodity futures broker in Valparaiso, Ind. He can be contacted at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of an order to buy or sell on a market.