Wednesday, March 19, 2014

Inflation Update

Just the other day, the ever-ravishing Mrs. Baseball, using her mad PhD. in Homemaker Economics skillz, noted the severe inflation in food prices she was seeing.  As readers know, I have been warning of the coming inflation in its two forms.  First was the stealth inflation of the "crapify".  Then comes simple, raw inflation.  We are past the first and on to the raw stuff.

Others are noting it too.

Grain crop prices ($ZC_F, $ZW_F, $ZS_F)  have gone higher in past years because of rising demand, but also because of drought.  No rain, no grain.  Farmers are planting fencepost to fencepost.  Still, a lot of land is idle because of CRP.  The cost to farm has gone up with the cost of energy.  Successful farmers look at cost/benefit analysis just like a factory.  Innovations like Farmlogs help them manage their cropland better.
Meat ($LC_F) has seen a tremendous upsurge in prices.  Part of that has been scare.  Remember the pink slime scare over a year ago?  Because of it, beef prices have to go up because not using pink slime decreases supply.   The cost of feed has gone up too (drought) so cattle ranchers thinned their herds.   Animal gestation isn’t automatic, and the cost to bring a steer to market hasn’t gone down, so the nation’s cattle herd isn’t being rebuilt on higher prices.
Hogs ($HE_F) have seen an exponential price move higher in recent weeks.  A virus, PEDv hit the nation’s hog herd last May.  At first, it was controlled.   Since the spread, US pig farmers have seen 5,000,000 pigs die, mostly piglets.  The crisis is so severe, the largest hog processing plant in the country, Tarheel in North Carolina, is shutting down a few days during the week because it cannot source enough pork to butcher.  Oh, and yes, the price of bacon is going to skyrocket.


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