• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Whatever you do, don't call it inflation.

Food prices have surged in 2014. The CRB Foodstuffs Index is up +16.5% year-to-date and +4.8% year-over-year. Rapid advances in coffee, beef, cheese and milk have largely fueled the overall basket.

Food: It’s What Rich People Eat! - Eating money

The Big Picture

Commodity prices up year-over-year:

  • Cheese Block
  • Lean Hogs
  • Rough Rice
  • Soybean
  • Live Cattle
  • Milk
  • Natural Gas
  • Coffee

Commodity prices down year-over-year:

  • Wheat
  • Chicken Whole Breast
  • Chicken Wings
  • Gasoline at the Pump
  • Corn
  • Sugar

Food: It’s What Rich People Eat! - chart5

Notable trends:

Coffee prices declined -12.1% over the past week.  However, they have surged +60.2% YTD and remain up +21.5% YoY due to a prolonged drought in Brazil that has hampered national productivity levels.

Pork and Beef prices continue to tick higher, up +3.2% and +1.8%, respectively, over the past week.  They are now up +50.1% and +16.0% YoY, respectively.  Don’t expect much relief anytime soon – pork prices continue to be pressured by low slaughter rates and a tight supply, while the overall impact of the Porcine epidemic diarrhea virus (PEDv) remains unknown.  Beef prices continue to rise amid a decline in cow herd sizes. Operators don’t expect much relief anytime soon as cattle herds take approximately two years to hit the market. 

Cheese Block and Milk prices are now up +49.4% and +37.6% YoY.  Many operators expect, and have expected, these prices to moderate, but we have yet to see any signs of a slowdown.

Wheat prices surged +5.6% over the past week, while Corn declined -0.1%.  Both commodities are down -6.8% and -16.9% YoY and continue to provide some relief for operators.  However, this benefit will continue to deteriorate if wheat stays on its current trajectory.

Chicken and Chicken Wing prices continue to provide relief to operators with notable exposure and menu flexibility.  Both commodities are down -7.3% and -26.6% YoY, respectively.

Gasoline at the Pump is down -4.6% YoY, despite ticking up +0.3% over the past week.  Despite being down on a YoY basis, gasoline prices have been quietly ticking over the past month.  Any sustained increase or decrease in gas prices could have a significant impact on the direction of discretionary spending and the consumer’s willingness to eat out.  While current prices are a bullish data point for the industry, current trends suggest this may soon change.

Subscribe to Hedgeye.