FarmPolicy

August 22, 2019

Ag Economy; Appropriations; Policy Issues; Senate Hearing; and, Political Notes

Agricultural Economy

Reuters writer Lucia Mutikani reported yesterday that, “U.S. consumer prices recorded their largest increase in more than a year in May as costs for a range of goods and services rose, likely easing the Federal Reserve’s concerns that inflation was running too low.

“The Labor Department said on Tuesday its Consumer Price Index increased 0.4 percent last month, with food prices posting their biggest rise since August 2011.”

The article noted that, “Food prices increased 0.5 percent in May, the fifth consecutive monthly increase.”

More specifically, the CPI report indicated that, “The index for meats, poultry, fish, and eggs rose 1.4 percent in May after a 1.5 percent increase in April, with virtually all its major components increasing.”

Bloomberg writer Megan Durisin reported yesterday that, “U.S. ground-beef prices are up 76 percent since 2009 to the highest on record, after a seven-year decline in the herd left the fewest cattle in at least six decades, government data show. Meat costs are rising faster than any other food group, eroding profit margins at Hormel Foods Corp. and forcing Costco Wholesale Corp. and Chipotle Mexican Grill Inc. to raise prices.

Supply probably will remain tight. It can take three years to expand the herd, and a prolonged drought in Texas, the top producer, parched pastures needed to raise young animals. The government says the U.S. will become a net beef importer in 2015. Cattle futures already up 22 percent in the past year in Chicago may rally 8.3 percent to $1.578 a pound by the end of December, a Bloomberg survey of five analysts showed.”

(more…)