Expect Food Prices to Go Higher and Higher

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With respect to food costs, Andrew Martin and Michael M. Grynbaum reported in today's New York Times that, "The government announced Friday that the cost of food had gone up yet again. This came as no revelation to Bruce Newton, a single father of two children. "As he wheeled a cart full of groceries out of a Stop & Shop supermarket in Bloomfield, N.J., on Thursday night, Mr. Newton complained that the price of chicken had become 'outrageous,' and eggs were so costly his mother sent him from store to store hunting for the cheapest ones. Essential breakfast items like milk, cereal and orange juice have become 'so expensive, but what are you going to do?'"

With respect to food costs, Andrew Martin and Michael M. Grynbaum reported in today's New York Times that, "The government announced Friday that the cost of food had gone up yet again. This came as no revelation to Bruce Newton, a single father of two children.

"As he wheeled a cart full of groceries out of a Stop & Shop supermarket in Bloomfield, N.J., on Thursday night, Mr. Newton complained that the price of chicken had become 'outrageous,' and eggs were so costly his mother sent him from store to store hunting for the cheapest ones. Essential breakfast items like milk, cereal and orange juice have become 'so expensive, but what are you going to do?'"

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The Times article added that, "Mr. Newton's pain is being felt in grocery checkout aisles across the country. Government figures released Friday showed that grocery costs had jumped 5.1 percent in 12 months , the latest in a string of increases. In fact, the nation is undergoing its worst grocery inflation since the early 1990s."

The article also noted that, "With a few exceptions, nearly every grocery category measured by the Labor Department, which compiles the official inflation numbers, has increased in the last year. Milk is up 17 percent, as are dried beans, peas and lentils. Cheese is up 15 percent, rice and pasta 13 percent, and bread 12 percent.

"No food product has gone up as much as eggs, jumping 25 percent since February 2007 and 62 percent in the last two years."

"While food costs increased, overall inflation held steady in February as the cost of gasoline declined that month, according to the latest Consumer Price Index, which the Labor Department updates monthly. That was an unexpected dose of good economic news that opens the door for more aggressive interest-rate cuts by the Federal Reserve, which is trying to head off a recession," the article said.

And the Times article also indicated that, "But Ephraim Leibtag, who tracks food prices for the Department of Agriculture's Economic Research Service, said that with farm prices remaining near record levels, he was not optimistic that food prices would moderate in 2008 http://www.ers.usda.gov/Briefing/CPIFoodAndExpenditures/ . Instead, he predicted that food inflation would be at least as high as in 2007, perhaps higher.

"Mr. Leibtag predicted that cereal and baking products would continue to increase because of steep prices for wheat; in fact, the price of cereal and bakery products increased 1.8 percent in February, the largest monthly gain since January 1975. Economists say higher food costs are being caused by rising energy prices, a weak dollar that encourages exports of American crops and food products, and soaring prices for farm commodities like milk, corn and wheat."

Also today, John Horn http://www.latimes.com/entertainment/la-et-popcorn15mar15... reported in today's Los Angles Times that, "As a consequence of the booming demand for alternative fuels -- with farmers replanting acres of popcorn with more profitable crops that can be converted into ethanol and other biofuels -- the sellers of the nation's favorite movie snack say the salty tub will soon take a bigger bite out of your wallet when you're at the multiplex."

The L.A. Times added that, "'The consumer will probably see an increase in popcorn prices pretty soon,' said Carlton Smith, the chairman of Iowa's Jolly Time popcorn brand.

"While the price hike will likely be modest, perhaps no more than 15 cents a serving, the rise is inevitable and necessary, according to the popcorn providers and theater owners gathered here for ShoWest, the annual convention of the National Assn. of Theater Owners, which ended Thursday."

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With respect to commodity futures prices, Dow Jones writer Tom Polansek http://online.wsj.com/article/BT-CO-20080314-710788.html reported yesterday that, "U.S. grain and soy futures tumbled Friday as traders booked profits amid jitters about the economy, analysts said.

"Most-active Chicago Board of Trade May corn, soybeans, soyoil and rice temporarily dropped their daily, exchange-imposed limits. U.S. wheat futures fell deep into negative territory."

And the Associated Press http://www.washingtonpost.com/wp-dyn/content/article/2008...  noted yesterday that, "Wheat for May delivery dropped 52.5 cents to $11.915 a bushel; May corn lost 10.25 cents to $5.5925 a bushel; May soybeans declined 50 cents to $13.5275 a bushel."

Keith Good

FarmPolicy.com