Everything That Can be Grown or Raised is Beating Stocks First Quarter

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Last year the agricultural index dropped 22 percent, but this year measures of crops and livestock in the S&P GSCI Index of commodities are up at least 15 percent. Corn is up 16 percent and lean hogs are up 51 percent this quarter. According to Bloomberg News, the Dow Jones Industrial Average is down 2 percent. It seems like everything that can be grown or raised is beating stocks in the first quarter. It has been reported that, Cattle, soybeans, Hogs, wheat and corn are all doing well in the first quarter.

Tony C. Dreibus, Leslie Josephs and Julie Jargon have reported in the Wall Street Journal that, “Surging prices for food staples from coffee to meat to vegetables are driving up the cost of groceries in the U.S., pinching consumers and companies that are still grappling with a sluggish economic recovery.

  

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U.S. Stockpiles of soybeans on March 1 most likely dropped to 987 million bushels (26.9 million metric tons), that’s the smallest for this time of year in a decade, according to the average of 30 analyst estimates that were compiled by Bloomberg.

Some commercial interests will view pullbacks in the market as buying opportunities. According to Farm Policy.com, “Federal forecasters estimate retail food prices will rise as much as 3.5% this year, the biggest annual increase in three years, as drought in parts of the U.S. and other producing regions drives up prices for many agricultural goods. The Bureau of Labor Statistics will release its latest monthly report on consumer prices for food and other products Tuesday.”

The article noted that, “In the U.S., much of the rise in the food cost comes from higher meat and dairy prices, due in part to tight cattle supplies after years of drought in states such as Texas and California and rising milk demand from fast-growing Asian countries. But prices also are higher for fruits, vegetables, sugar and beverages, according to government data. In futures markets, coffee prices have soared so far this year more than 70%, hogs are up 42% on disease concerns and cocoa has climbed 12% on rising demand, particularly from emerging markets.”  As the price levels rise, producers should be offsetting the price risk by making cash sales and using options to manage the risk.

Russia, one of the world’s key wheat suppliers, has reported that it might raise its 2014 grain crop forecast by two million tonnes to 97 million tonnes thanks to the harvest in Crimea, according to Producer.com.

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Image credit: www.deltafarmpress.com