Tuesday, December 22, 2009

Lay In the Food Supplies

The Wisconsin Farm Bureau is sanguine.

Rising milk, beef, pork and chicken prices will double the pace of U.S. food inflation next year as livestock supplies shrink and rebounding economies boost demand, predicted Michael Swanson, a senior economist at Wells Fargo & Co. Retail food prices may jump as much as 6 percent in 2010, Swanson said. “Producers of cattle, hogs, dairy cows and poultry cut production after a jump in feed costs last year, reducing supplies as demand for meat is rising at home and abroad,” Swanson said. “Corn, the main source of animal feed, will rally next year because of record demand for grain to make ethanol. Protein inflation is going to be much higher than people are anticipating. Corn is a proxy for feed costs, and right now the value of all meat and dairy output is below the price of feed on a long-term relative basis.

Umnnnhhh....note that they count on corn being burned in gas-tanks.

That's an assumption which may have to change.

HT: Random10

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