Corn prices have risen roughly 50% in 2021 and a bushel costs more than twice what it did a year ago.
“Corn has been one of the sharpest risers in the broad rally in raw materials that is prompting companies to boost prices for goods and fueling concern among investors that inflation could hobble the post-pandemic economic recovery.”
The Journal article noted that, “Farmers have a few factors to thank for high prices.
“China is on a corn-buying binge while racing to fatten millions of hogs to replace the pigs it had to kill during an outbreak of African swine fever before the pandemic. China is expected this year to import about four times what it normally buys from abroad, most of it from U.S. farmers.
“Corn-growing regions of South America are parched. Brazil expects a meager safrinha, or second crop, which will reduce its export. In Argentina, the Paraná River is too shallow for fully loaded boats to pass from the country’s interior to Atlantic shipping lanes.
“Beijing is also replenishing its soy reserves, adding locally grown soybeans for the first time since 2017 to curb any possible food inflation. The domestic crop isn’t genetically modified and is used for foods such as tofu rather than animal feed. China has also frequently released pork reserves to cool rising prices of the nation’s most widely consumed meat.”
For the most part, U.S. #corn export inspections have been running at well above normal/record pace since late February. May got off to a bit of a slower start, but the last week in April featured the third biggest weekly volume on record and the second biggest of the year. pic.twitter.com/yofmUGDslw
“Big buyers including Walmart Inc. and Sysco Corp. are fining suppliers over infractions like late or incomplete orders. Retailers excused such penalties for months during the pandemic when surging demand led to widespread shortages.
Meanwhile, many food makers and distributors say labor shortages, supply constraints and high freight costs are making it difficult to deliver complete, timely orders for goods from cake mix to ramen noodles. Similar tensions are mounting throughout the U.S. economy, as industries contend with shortages of supplies and complications of reopening businesses in the wake of the coronavirus pandemic. Prices for many foods, consumer products and other goods are rising as a result.
The Journal article noted that, “‘The supply-chain challenges are still there,’ said Henk Hartong, chief executive officer of Brynwood Partners, which owns Hometown Food Co., the maker of Pillsbury cake mixes and Buitoni pasta. He said wheat costs have soared and shipments for ingredients including vitamin C for Sunny D are running behind: ‘It’s not just one thing, it’s everything.'”
“Kellogg Co. , maker of Frosted Flakes, Cheez-Its and Pringles, said Thursday that higher costs for ingredients, labor and shipping are pushing it and other food makers to raise prices. ‘We haven’t seen this type of inflation in many, many years,’ Chief Executive Officer Steve Cahillane said.”
Bloomberg writer Michael Hirtzer reported on Monday that, “Tyson Foods Inc. warned it’s struggling to meet rebounding chicken demand because of a worker shortage and slow hatchings, even as a strong beef market will boost overall sales.
“The biggest U.S. meat company is seeing robust demand as the world economy mends from the pandemic, and it’s raising prices across businesses to pass through higher animal-feed costs and other expenses. That will help make up for thinner returns in chicken, where labor tightness means that plants are operating at about 80% of capacity. Tyson also said it can’t maximize profit in its pork unit because of a dearth of skilled labor to strip down carcasses.”
The Bloomberg article indicated that, “‘We’re seeing substantial inflation across our supply chain, which will likely create margin pressure during the back half of the year,’ Tyson Chief Executive Officer Dean Banks said in the statement.”
U.S. consumer prices are set to surge, having dipped during the pandemic slowdown. With commodity prices skyrocketing, should investors prepare for transient or permanent inflation? Presented by @CMEGrouppic.twitter.com/rc2bRt8eru
“After a year promoting takeout wings and crispy chicken sandwiches, restaurants including KFC, Wingstop Inc. and Buffalo Wild Wings Inc. say they are paying steep prices for scarce poultry. Some are running out of or limiting sales of tenders, filets and wings, cutting into some of their most reliable sales.
“Independent eateries and bars have gone weeks without wings, owners say. Chicken breast prices have more than doubled since the beginning of the year, and wing prices have hit records, according to market-research firm Urner Barry.”
Keith Good is the social media manager for the farmdoc project at the University of Illinois. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily FarmPolicy.com News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.
Donnelle Eller reported on the front page of today's Des Moines Register that, "This year's planting season is about as unusual as Blake Reynolds can recall: Snow, rain and cold meant he started planting corn and soybeans this year in…