WEEKLY COMMODITY CHARTBOOK

The important commodities, at least for the food and restaurant industries, moved higher over the last week.  Despite the dollar strengthening over the past week, commodities went higher including those that typically trade with an inverse correlation to the greenback.

 

Please scroll down for charts detailing the trends of individual commodities.

 

 

STOCK THOUGHTS

 

Corn - WEN, TXRH, CMG, SAFM

 

Corn is an important for all companies in the restaurant industry, not only those I mentioned in the heading.  Corn prices gained again over the last week, even as the dollar gained, as the USDA crop progress report indicates that 87% of the harvest for the top 18 corn-producing states is complete.  The USDA also cut its corn harvest estimate by roughly 1% from its previous forecast.  The expected yields, per the USDA are now at 146.7 bushels per acre, down 1.4 bushels from the October forecast.  If this yield were to come about, it would be the lowest yield since 2003.

 

BeefWEN, TXRH, CMG

 

Texas is the state most associated with the drought that has plagued cattle farmers this year but ranchers in Arkansas are now stepping up the rate at which they are culling their herds.  The quality of the calves being sold is also down, according to market participants interviewed by cattlenetwork.com.  With grain too expensive to maintain herd sizes through the winter, and small rain showers having no material impact on soil conditions, farmers are downsizing their herds drastically. 

 

While this is boosting supply in the near-term, for FY12 it may mean even higher prices.  Consumer may expect higher retail prices in the grocery aisle but, as WFM noted in its earnings call last week, passing on inflation in meat prices has proven difficult.

 

ChickenBWLD

 

Chicken wing prices have continued their march higher.  As we wrote recently, food industry experts’ commentary as well as our own analysis gives us confidence that BWLD could have year-over-year inflation in wing prices beginning in the first quarter of 2012.  Replicating the 3Q11 strategy of driving comps via a promotion will likely be difficult in 2012 if the company faces significant inflation.  Some industry experts see $1.50 wings next year and sustained year-over-year inflation versus 2011 next year.

 

Coffee – SBUX, DNKN, PEET, CBOU, THI, MCD

 

Coffee prices moved higher over the last week after the previous seven days’ decline.  Despite the crisis in Europe and the strengthening dollar, coffee prices gained 2.3% over the last week as coffee exports from Brazil fell to 3.1 million bags in October from 3.5 million a year prior.  A University of Sao Paulo research group, Cepea, is stating that the 2012-13 harvest may still be a record, despite concern that dry weather and frosts earlier in the year could have hampered crop development.

 

WEEKLY COMMODITY CHARTBOOK - commod 119

 

 

CORRELATION TABLE

 

WEEKLY COMMODITY CHARTBOOK - correlation table 119

 

 

CHARTS

 

Coffee


WEEKLY COMMODITY CHARTBOOK - coffee 119

 

 

Corn

 

WEEKLY COMMODITY CHARTBOOK - corn 119

 

 

Wheat

 

WEEKLY COMMODITY CHARTBOOK - wheat 119

 

 

Beef

 

WEEKLY COMMODITY CHARTBOOK - beef 119

 

 

Chicken – Whole Breast

 

WEEKLY COMMODITY CHARTBOOK - chicken whole breast 119

 

 

Chicken Wings

 

WEEKLY COMMODITY CHARTBOOK - chicken wings 119

 

 

Cheese

 

WEEKLY COMMODITY CHARTBOOK - cheese 119

 

 

Milk

 

WEEKLY COMMODITY CHARTBOOK - milk 119


 

 

Howard Penney

Managing Director

 

Rory Green

Analyst


Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more