Walt's weekly commentary has been published for over 20 years. Our column currently has a circulation of over 500,000 plus thousands more online. The column, written on Fridays for Saturday publication, provides a brief summary of commodity futures market highlights for the week. It provides insight, education and entertainment to readers across the United States. If Futures File is not published in your local newspaper, you can read this week's column below: |  |
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- August 27, 2010 Commodities Rise, But Not At the Store Prices for agricultural commodities dashed higher over the last few months, which has many consumers concerned about rising food costs. Since early June, corn prices rose 27% to $4.25/bushel, soybeans climbed 14% to $10.21/bu, and wheat sprouted a massive 49%. Rising grain prices have also pulled cattle (+11%), hog (+5%), and milk (+12%) prices higher, as livestock producers depend on corn, wheat and soybeans to feed their animals. More exotic commodities are becoming more expensive, with sugar rushing 37% higher to 19.6 cents per pound and coffee buzzing up 33% to $1.78 per pound. Despite these substantial moves in food prices, your grocery and restaurant bills are likely increasing by only a small amount. Food vendors are wary of raising and lowering prices frequently, so they attempt to smooth out their expenses by hedging, or “locking in” prices for their inputs months into the future. For example, a fast food chain may establish its price for the wheat, cheese and beef that make up its popular cheeseburgers months in advance. To do this, they “pre-buy” their products on the futures markets, allowing them to provide their customers with steady prices. Consumers have also benefitted from a mild drop in energy prices over the last three months. Crude oil, gasoline and diesel fuel prices have all decreased by about 4%, which makes the production, transportation, and packaging of foods less expensive. Nonetheless, worldwide weather problems and increased demand coming from Asia will ultimately pull retail food prices higher, so consumers may be forced to belt-tighten even more in the coming months. |
