Markets: Food Makers

[Robbien]

Source: Houston Chronicle

NEW YORK — A Citi Investment Research analyst said Tuesday food manufacturers will need to raise retail prices again since food costs continue to skyrocket.

Analyst David Driscoll said in a note to investors that even though retail prices in the third quarter are already 5 percent higher year over year, commodities have "picked up speed" over the past six months. The price of wheat, for example, has jumped 66 percent during that time period and dairy costs have risen 58 percent. Coffee costs have also gone up 13 percent, he said.

Costs are higher due to a number of reasons, including crop disease, weather conditions, animal feed costs and a rise in international demand for commodities.

Most food companies have already raised prices and a number of them, including Hershey Co., Campbell Soup Co. and ConAgra Foods Inc., have said retail prices could go even higher in fiscal 2008.

Read more: http://www.chron.com/disp/story.mpl/ap/fn/5237757.html

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Related article on Ethanol
High grain prices puts break on US bioethanol
http://www.fwi.co.uk/Articles/2007/10/23/107743/high-grain-prices-puts-break-on-us-bioethanol.html

“Cost of feedstock and price of crude oil are key factors in the growth of the industry and corn prices are 80% higher than 18 months ago.”

High corn prices were a knock-on effect of buoyant wheat markets – largely due to poor weather in key production areas such as Australia

and another article on Bread
Rising price of wheat means bread will cost more dough
http://www.gloucestertimes.com/punews/local_story_294230736.html?keyword=topstory

“The main thing is that many farmers have converted their acreage from wheat to corn to take advantage of the demand for ethanol, used in gasoline and which draws very high prices for growers,” Hardy said. “Farmers that had planted wheat for 50 years are now planting corn,” he said.

The shrinking supply has caught the attention of speculators working for Wall Street hedge funds, and they are buying up grain futures, putting more pressure on prices.

In addition, more U.S. wheat is going overseas because of the weak dollar and increasing demand from rapidly developing countries like China and India. Colorado is one of the few U.S. wheat-growing states that produced a bumper crop this year, but nearly 80 percent of the harvest is exported.

[monktonman]

1. Hmmm winter is coming. Heat or food, heat or food....

Forget about the meds.
Its heat or food.
Maybe I could eat a sheep and barf up a sweater.