Here’s why live cattle, orange juice, cocoa, olive oil prices are surging

The US published mixed inflation numbers this month. According to the Bureau of Labor Statistics (BLS), the headline consumer inflation jumped to 3.7% in August while core inflation slipped to 4.2%. 

Live cattle price is surging

These numbers imply that the country’s inflation remains high and higher interest rates are making it worse. For one, there are signs that the average mortgage rate will jump to 8% in the coming weeks. Auto loans and other personal loans interest has jumped while M2 money supply has soared. 

A key challenge for the Fed is that commodity prices are spiking again. Brent crude oil has jumped to $95 and there are signs that it will hit $100 soon. Most importantly, important food commodities are now at an elevated level.

Watch here: https://www.youtube.com/embed/U7n4v3HHdZ8?feature=oembed

Live cattle price has jumped by more than 20% this year and is now sitting at its highest point on record. Data by Barchart shows that the live cattle price ended the week at $183, a few points below the all-time high of $189. 

Live cattle prices has dropped because of the elevated demand in the US and the slowing growth of production. Climate activists have for years accused beef farmers of having major methane emissions. 

Cocoa, orange juice, olive oil soaring

Cocoa price has also surged, as I wrote here. It has jumped by more than 64% from the lowest level in 2020. This growth is mostly because of the falling yields in Ivory Coast and Ghana, which control the market. Demand for cocoa has also been rising over the years. Cocoa is an important commodity used to manufacture chocolate.

Orange juice has also soared in the past few years because of the falling production in Florida. Florida’s production has crashed in the past few months because of the strength of recent hurricanes. 

Live cattle just closed at their highest price on record and are now up ~20% this year alone.

Meanwhile, olive oil prices are up 100% and orange juice prices are up 70% this year.

Inflation on food away from home stands at 6.5% and inflation on meats, poultry, fish, and eggs is… pic.twitter.com/v4mprshMG9

— The Kobeissi Letter (@KobeissiLetter) September 22, 2023

Olive oil price has jumped by more than 100% this year because of the rising concerns of drought in key European countries. In a recent note, the USDA said:

“The average price in August was 130 percent higher than the year before, with prices quickly surpassing the previous record of $6,242/ton set in 1996 with no sign of easing. While prices have moderated consumption somewhat, consumer and cultural preferences for olive oil make it difficult to substitute.”

Taken together, the implication of all this is that inflation will remain stickier for a while. Besides, farmers are now paying higher interest rates while the ship traffic jam at the Panama Canal is making things worse.

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