Department of Agricultural EconomicsPurdue University
Food Price Outlook
Corinne Alexander
[email protected] Purdue University August 19, 2011
Department of Agricultural EconomicsPurdue University
1990199119921993199419951996199719981999200020012002200320042005200620072008200920102011
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Food Price IndexMeat Price IndexDairy Price IndexCereals Price IndexOils Price IndexSugar Price Index
FAO World Food Price Index: Annual
Department of Agricultural EconomicsPurdue University
1/2009
3/2009
5/2009
7/2009
9/2009
11/2009
1/2010
3/2010
5/2010
7/2010
9/2010
11/2010
1/2011100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0 Food Price IndexMeat Price IndexDairy Price IndexCereals Price IndexOils Price IndexSugar Price Index
FAO World Food Price Index: Monthly
Department of Agricultural EconomicsPurdue University
jan-09
march-09may-09
jul-09sept-09
nov-09jan-10
mar-10may-10
july-10sept-10
nov-10jan-11
mar-11may-11
jul-11-3.0%-2.5%-2.0%-1.5%-1.0%-0.5%0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%5.5%6.0%6.5%
Retail Food Price Changes,Year-over-Year Annual Rates, By Months, 2009- July 2011
Year
-Ove
r-Ye
ar %
Cha
nge
CPI-U
Food at Home
Food Away
Department of Agricultural EconomicsPurdue University
2003 2004 2005 2006 2007 2008 2009 2010 407250.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Average Annual Food Prices: 2003-2011(Calculated as Average of Monthly Year-over-Year Percent
Changes)
Food away
Food at home
Annu
al P
erce
nt C
hang
e
http://www.ers.usda.gov/Briefing/CPIFoodAndExpenditures/Data/cpiforecasts.htm
Department of Agricultural EconomicsPurdue University
Romaine lettuceTomatoes, field, lb.
Oranges, Navel, Val., lb.Rice, white, long grain, uncooked, per lb.
Natural gas 40 thermschicken breast, boneless
Ham, boneless, lbPeanut Butter, all sizes, lb.
Electricity per kwhChicken, fresh, whole, lb.
Pork Chops, center cut bone-inTurkey, frozen, whole, lb.
Cheese, Am. Proc., lb. Margerine, stick, lb.
Bananas, lb.Lettuce, iceberg, lb.
Choc. Chip Cookies, lb.Steak, round, Choice, boneles
Apples, Red. Del., lb.Potatoe chips, 16 oz.
Chuck Roast, Choice, bnls. LbAll ground beef, per lb.
Ice Cream, prepak, bulk, 1/2galRound Roast, Ch., boneless
Flour, white, lbMilk, fresh, whole, fort., gal.
Sugar, white, all sizes, lbOrange Juice, Froz. Conc. 12oz
Bread, white, lb.Bacon, sliced, lb.
Eggs, grade A, large, doz.Ground Beef, 100% beef, lb.
Spaghetti, macaroni, lb.Butter, salted, AA, stick, lb.
Cheddar cheese, natural, per lbPotatoes, white, lb.
Gas, unleaded, reg, gal.Coffee, ground rst., all sizes, lb
Grapes, Thomp. Seedl. Lb.
-15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55%
Retail Food Prices: Percentage Changes, July 2010 to July 2011
Source: US Bureau of Labor Statistics, Consumer Price Index, National City Average
Department of Agricultural EconomicsPurdue University
Changes in Food Price Indexes, 2008 through 2012
Item Relative AnnualAnnualAnnu
alForecas
t Forecast
importance 1 2008 2009 2010 20112 20122
Consumer Price Indexes Percent Percent changeAll food 100.0 5.5 1.8 0.8 3.0 to 4.0 2.5 to 3.5 Food away from home 43.1 4.4 3.5 1.3 3.0 to 4.0 2.0 to 3.0 Food at home 56.9 6.4 0.5 0.3 3.5 to 4.5 3.0 to 4.0 Meats, poultry, and fish 12.5 4.2 0.5 1.9 5.0 to 6.0 4.5 to 5.5
Meats 7.9 3.5 -0.6 2.8 6.0 to 7.0 4.5 to 5.5 Beef and Veal 3.7 4.5 -1.0 2.9 7.0 to 8.0 6.0 to 7.0 Pork 2.5 2.3 -2.0 4.7 6.5 to 7.5 4.0 to 5.0 Other meats 1.7 3.1 2.3 -0.1 3.0 to 4.0 2.5 to 3.5 Poultry 2.4 5 1.7 -0.1 2.5 to 3.5 3.0 to 4.0 Fish and seafood 2.2 6 3.6 1.1 5.5 to 6.5 4.0 to 5.0 Eggs 0.7 14 -14.7 1.5 4.5 to 5.5 3.0 to 4.0 Dairy products 6.1 8 -6.4 1.1 5.0 to 6.0 3.0 to 4.0 Fats and oils 1.7 13.8 2.3 -0.3 6.5 to 7.5 4.5 to 5.5
Department of Agricultural EconomicsPurdue University
Changes in Food Price Indexes, 2008 through 2012
Item Relative AnnualAnnualAnnu
alForecas
t Forecast
importance 1 2008 2009 2010 20112 20122
Consumer Price Indexes Percent Percent change Fruits and vegetables 8.4 6.2 -2.1 0.2 3.5 to 4.5 2.0 to 3.0
Fresh fruits & vegetables 6.4 5.2 -4.6 0.6 3.5 to 4.5 2.0 to 3.0
Fresh fruits 3.3 4.8 -6.1 -0.6 2.0 to 3.0 1.5 to 2.5
Fresh vegetables 3.2 5.6 -3.4 2.0 4.5 to 5.5 2.5 to 3.5 Processed fruits & vegetables 1.9 9.5 6.6 -1.3 1.5 to 2.5 3.0 to 4.0
Sugar and sweets 2.2 5.5 5.6 2.2 2.5 to 3.5 2.0 to 3.0 Cereals and bakery products 7.9 10.2 3.2 -0.8 3.5 to 4.5 2.5 to 3.5
Nonalcoholic beverages 6.7 4.3 1.9 -0.9 2.0 to 3.0 1.5 to 2.5
Other foods 10.7 5.2 3.7 -0.5 2.5 to 3.5 2.0 to 3.0
Fruits and vegetables 8.4 6.2 -2.1 0.2 3.5 to 4.5 2.0 to 3.0
Fresh fruits & vegetables 6.4 5.2 -4.6 0.6 3.5 to 4.5 2.0 to 3.0
Fresh fruits 3.3 4.8 -6.1 -0.6 2.0 to 3.0 1.5 to 2.5
Fresh vegetables 3.2 5.6 -3.4 2.0 4.5 to 5.5 2.5 to 3.5
Department of Agricultural EconomicsPurdue University
http://www.ers.usda.gov/Publications/ERR114/ERR114.pdf
Ingredient Prices UpCommodity
Price Today
2010 2009 2008 2007
Corn $6.99 $4.12 $3.24 $5.75 $3.41Crude Oil $82.50 $75.4
5$72.85 $115 $68.6
0Soybeans $13.50 $10.3
4$9.57 $12.94 $8.49
Soybean Oil
$0.55 $0.41 $0.36 $0.53 $0.36
Wheat $7.11 $6.56 $4.69 $8.75 $7.26Live Cattle $115.2
0$96.2
5$88.83 $100.7
0$94.3
8Lean Hogs $86.65 $75.9
8$46.95 $75.10 $70.6
5Milk $19.00 $15.3
7$12.90 $17.20 $19.8
3
Late August CME Nearby Futures Quotes
Ingredient Prices Up
Commodity
Price Today
2010 2009 2008 2007
Coffee $2.65 $1.77 $1.21 $1.42 $1.13Sugar $0.29 $0.20 $0.24 $0.13 $0.09Oats $3.45 $2.65 $2.11 $3.45 $2.42Orange Juice
$1.74 $1.38 $0.90 $1.09 $1.25
Cocoa $2,985
$2,698
$2,772
$2,864 $1,868
Late August CME Nearby Futures Quotes
2012 Food Price Prediction• ERS predicts (June 25, 2011)
• 3.0 to 4.0% for 2011• 2.5 to 3.5% for 2012
• Corinne• 3.5 to 5.0% for 2011• 3.0 to 4.0% for 2012
• Big unknowns are• Weather and it’s impact on crop and livestock
production• Global economy• Individual categories will see sharp increases
• Pasta, beef, … Department of Agricultural EconomicsPurdue University
I think most farmers here know, particularly if you’re in livestock farming, right now the costs of feed keep on going up and the costs of food as a consequence are also going up. Only about 4 percent of that is accounted for by corn being diverted into ethanol, but as you see more and more demand placed on our food supplies around the world — as folks in China and folks in India start wanting to eat more meat and commodity prices start going up, it’s going to be important for us to figure out how can we make biofuels out of things that don’t involve our food chain.
-Obama, 8/17/2011
Department of Agricultural EconomicsPurdue University
Questions?