Over the past few months, basic commodities that make up the bulk of Americans’ morning meal have risen sharply in price. Although the reasons for the price increases vary, most people will be likely to see higher food costs at the breakfast table in the coming months.
Breakfast beverages like coffee and orange juice have had some of the sharpest increases in recent months, gaining nearly 50 percent since last fall. Drought conditions in Brazil have been reducing coffee and orange juice production; Brazil is the world’s largest producer of both oranges and coffee.
Meat prices have been rising as well, led higher by pork, which is trading near all-time highs. Bacon and sausage are becoming more expensive as a result of a disease that is estimated to kill off as much as 10 percent of this year’s piglets, sharply reducing the pork supply.
Even cereal eaters have not been spared the price increases. Milk has gushed higher as drought in Western states cuts into cows’ production. Meanwhile, breakfast cereal staples like oats and wheat have each risen by more than $1 per bushel in recent months. Wheat gained amid concerns about dry weather in the Midwest affecting this year’s crop and fears that the Ukrainian crisis could restrict exports from Eastern Europe, while oats jumped as logistical issues prevented movement of the grain from Canadian farms to American consumers.
Ethanol Boils Over
Despite falling gasoline prices over the past month, some drivers may be seeing higher pump prices due to a sharp increase in ethanol pricing. Ethanol is commonly blended with gasoline to boost the octane power of the fuel.
Since late January, ethanol futures have risen more than a dollar per gallon, trading Friday for $2.82 per gallon, the highest price in over two years. Most of the U.S. ethanol is produced in Midwestern corn-producing states, but is predominantly consumed in the heavily-populated East Coast, requiring train transportation to get the fuel to consumers.
Prices have been rising as rail shipments of the fuel slowed to a trickle this winter. Snowstorms have reduced rail volumes significantly, and many trains have been diverted to carry more lucrative goods, like crude oil.
Longer term, some analysts expect prices to decline as the glut of Midwestern ethanol reaches demand markets, but warn that the process will take time.