Tuesday, July 28, 2015 04:24am
North Adams, MA now: 64 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
LOG IN | REGISTER NOW   

Home About Archives RSS Feed
The Independent Investor: Holy Cow
By Bill Schmick On: 01:04PM / Friday May 30, 2014

While shopping for my Memorial Day cook-out last weekend, I experienced a lethal dose of sticker shock. Steaks, roasts, spare ribs, pork loin, even ground beef were commanding prices that were a good 5 to 9 percent higher than they were at the start of the year.

Unfortunately, it appears prices will go higher still in the months ahead. Here's why.

Remember the Drought of 2012? The results of that dry period are still having repercussions on food prices today. Back in July of that year this is what I wrote: "If one looks at just the price of corn in the United States, which has increased in price by 38 percent since June 1, it is not hard to predict increases in processed food prices by the winter. Since other staples, like soybeans and wheat, are also wilting in the heat there could be a domino effect across the board for all kinds of agricultural products."

That domino effect had an interesting and long-lasting impact over the short and medium terms for all sorts of food stuffs including beef and pork prices. This was my advice back then.

"It might surprise you, however, that the prices of beef, poultry and pork might actually decline in the short term. That's because livestock producers would rather send their herds to slaughter now than face the increased costs of feeding them in the future. Out West, (today's potential Dust Bowl) many ranchers have simply run out of range land that could support their herds. As this new supply of livestock is dumped on the market, prices should ease a bit before heading up, so plan accordingly. The best strategy would be to stock up now and freeze for the future."

I hope you took my advice and have a very big freezer.

Fast forward to today, almost two years later, and we find that meat prices have seen almost record monthly increases across the nation. As a result of the drought and the subsequent livestock slaughter that followed, the U.S. now has the lowest cattle numbers since 1951.

Inventory continues to decline. At some point ranchers and farmers will begin to rebuild their stock as prices continue to move higher. But there is no quick fix because it takes at least 18 months for a calf to become market ready. Some experts estimate it could take up to three or four years before the nation's herds are back to what they were before the drought.

As for pork prices, the porcine epidemic diarrhea virus is a major cause of reduced pork production. The virus has now spread to 26 states with devastating effect. The pork industry lost almost 8 million animals, mostly piglets, to the disease over the last year. As a result, the USDA is expecting a 2.3 percent decline in overall pork production for 2014. In the meantime, most food analysts are expecting the consumer to pare back on meat purchases and substitute chicken in their diets. It is much cheaper per pound and mush easier to increase production. It would only require six months or so to meet added demand.

However, I am betting poultry prices will see some price inflation as well. As for meat, it appears that higher prices are going to be with us for the foreseeable future.

And there may be more bad news for U.S. consumers. Analysts are betting that the return of El Nino this year, somewhere between August and October, will have a negative impact on certain crop yields.

El Nino, readers may recall, is a climatic phenomenon caused by warm waters in the Pacific Ocean that can trigger ferocious rain and flooding in some areas while drought in others.

In the past, this weather event has caused devastating crop losses. In turn, this has resulted in huge and sudden price spikes, especially in soft commodities like sugar, coffee, cotton and cocoa. The last "super El Nino" was in 1997. That year, from Florida to California, there were storms, tornadoes and mudslides.

The bottom line is that you can expect food prices across the board to keep climbing.

So welcome to America, a land where there is no "official" inflation, unless you need to eat, consume gasoline, buy clothing, rent space, put a child through school or pay medical bills.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



0 Comments
     
News Headlines
North Adams Considering 'Adopt an Island' Beautification Plan
Williamstown Board Asked to Restrict Parking on Lee Terrace
Gilbane Awarded Contract For New Taconic High School
Adams Lions Spreading Word on Activities, Vision Care
Bopp, Alibozek Lead Team to Narrow Win
Local Author Publishes Book On Northern Berkshire Trains
Clarksburg Cemetery Stones Being Repaired
Brewing Boomed In Pre-Prohibition Pittsfield
Local Lawmakers Push To Override Baker's Budget Vetoes
LaFesta Baseball Exchange Marks 25 Years

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (175)
Independent Investor (237)
Archives:
July 2015 (5)
June 2015 (8)
May 2015 (6)
April 2015 (8)
March 2015 (6)
February 2015 (7)
January 2015 (9)
December 2014 (7)
November 2014 (4)
October 2014 (9)
September 2014 (5)
August 2014 (7)
Tags:
Debt Ceiling Energy Stocks Oil Europe Rally Fiscal Cliff Retirement Congress Recession Jobs Stimulus Election Debt Metals Greece Deficit Housing Stock Market Selloff Fed Japan Pullback Economy Federal Reserve Europe Euro Currency Taxes Markets Banks Crisis Commodities Interest Rates Bailout
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
The Independent Investor: Are You Ready for El Niņo
@theMarket: O Ye of Little Faith
The Independent Investor: When 'No' Means 'Yes'
@theMarket: Global Markets Weather a Wild Week
The Independent Investor: Same-Sex Marriage Good for Business
@the Market: Second Quarter Earnings on Deck
The Independent Investor: Tiny Houses Gain Appeal
@theMarket: From Russia With love
The Independent Investor: Robo-Advisers Have Landed
@theMarket: Don't Try to Trade This Market


Park Street Fair (Hi-Jinks...
Park St. was closed off to traffic Monday night for the...
Gather-In Festival 2015
The annual Gather-In, a celebration of Pittsfield's...
'Romeo & Juliet' @ Pittsfield...
Free performances of 'Romeo & Juliet' run through Aug. 2 at...
LaFesta Baseball 2015
The LaFesta Baseball Exchange marked its 25th anniversary...
Bulldogs Win Cal Ripken State...
The Lanesborough Bulldogs used a big base-running play to...
Spark @ Naumkeag
Berkshire Creative held its July Spark mixer at the...
LL: Pittsfield vs Longmeadow
The 10- and 11-year-old Pittsfield National Little League...
Pittsfield Polish Picnic
St. Joseph's Church in Pittsfield hosted the annual Polish...
Pittsfield Babe Ruth WMass...
The Pittsfield Babe Ruth 15-year-old All-Stars beat Holden...
Shire City Sessions July 2015
The inaugural Shire City Sessions drew a crowd to hear US...
3rd Thursday June 2015
Pittsfield's 3rd Thursday monthly street fair featured...
Cheshire Block Party
Cheshire's first Block Party featured live music, food,...
Berkshire Museum Science...
The Berkshire Museum in Pittsfield hosted a free evening of...
Pittsfield Rally Against...
Residents gathered at Linden Street to call for community...
Eagle Street Beach Party 2015
A few shots from the annual beach party Friday night in...
Live On The Lake Concert
Burbank Park on Onota Lake in Pittsfield. The band Who Are...
Park Street Fair (Hi-Jinks...
Park St. was closed off to traffic Monday night for the...
Gather-In Festival 2015
The annual Gather-In, a celebration of Pittsfield's...
'Romeo & Juliet' @ Pittsfield...
Free performances of 'Romeo & Juliet' run through Aug. 2 at...
LaFesta Baseball 2015
The LaFesta Baseball Exchange marked its 25th anniversary...
Bulldogs Win Cal Ripken State...
The Lanesborough Bulldogs used a big base-running play to...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings |
Advertise | Recommend This Page | Help Contact Us
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2012 Boxcar Media LLC - All rights reserved

Privacy Policy| User Agreement