Evening Report | November 23, 2022
Check our advice monitor on ProFarmer.com for updates to our marketing plan.
Happy Thanksgiving from Pro Farmer…Markets and government offices are closed on Thursday for Thanksgiving. As a result, there will be no Pro Farmer market updates tomorrow. On Friday, markets are open for an abbreviated trading session from 8:30 a.m. to 12:05 p.p. CT. Due to the shortened schedule we will only send out two reports— “First Thing Today” Friday morning around 8:00 CT and “After the Bell” highlighting the day’s price action after the closes. Happy Thanksgiving from your Pro Farmer Staff.
Fed signals tapping brakes on rate hikes… A “substantial majority” of policymakers at the Federal Reserve's meeting early this month agreed it would “likely soon be appropriate” to slow the pace of interest rate hikes as debate broadened over the implications of the U.S. central bank's rapid tightening of monetary policy, Reuters reported, citing the minutes from the session. The readout of the Nov. 1-2 meeting, at which the Fed raised its policy rate by three-quarters of a percentage point for the fourth straight time, showed officials were largely satisfied they could stop front-loading the rate increases and move in smaller, more deliberate steps as the economy adjusted to more expensive credit.
November’s U.S. consumer sentiment marked a 4-month low as high inflation and rising interest rates erode consumer purchasing power. The report revealed the consumer sentiment index for November was upwardly revised to 56.8 from the preliminary reading of 54.7, while economists had expected a more moderate upward revision to 55.0. While the upward revision was larger than expected, the consumer sentiment index was still well below the final October reading of 59.9, and is down 16%, annually.
USDA holds food price inflation outlook at lofty levels. The Consumer Price Index (CPI) for all food in 2022 is forecast to rise by 9.5% to 10.5% while food at home (grocery) prices are forecast up 11% to 12% with an increase for food away from home (restaurant) prices of 7% to 8%. Those figures would be the highest for all food since they were up 11% in 1979, for grocery store prices the biggest rise since 1974 when they moved up 12.7%, and the biggest rise in restaurant prices since they increased 9% in 1981.
The CPI for all food increased 0.7% from September 2022 to October 2022, and food prices were 10.9% higher than in October 2021. Grocery store prices were up 0.5% in October compared with September and up 12.4% from year-ago, while restaurant prices were 0.9% higher in October and 8.6% higher than year-ago marks.
Adjustments this month were in several food categories…ranges for seven food categories and one aggregate category were revised upward, while three food price categories were revised downward.
USDA analysis: USDA said the “continuing increases in the Federal funds (interest) rate by the Federal Reserve place downward pressure on prices, and prices for unprocessed agricultural commodities have decreased each month since peaking in May 2022.”
The impact of bird flu cases is being felt relative to egg prices and USDA said the situation needs to be monitored closely with over 50 million birds in 267 flocks in 46 states affected. “Retail egg prices increased 10.1% in October 2022 and reached 43.0% above October 2021 prices,” USDA said. “The ongoing outbreak of highly pathogenic avian influenza (HPAI) reduced the US egg-layer flock, as well as the poultry flock to a lesser extent. This decrease in the poultry flock and spike in HPAI prevalence are expected to increase wholesale and retail egg prices for the coming months.”
USDA also adjusted upward its forecasts for forecast ranges for fats and oils, sugar and sweets, and nonalcoholic beverages. “Economy-wide factors, including ongoing supply-chain issues and energy, transportation, and labor costs, have contributed to increases in prices across food categories,” USDA noted. “However, recent declines in agricultural commodity and energy prices are expected to ease price increases across these categories through the remainder of 2022.” Compared with 2021, USDA sees 2022 prices for fats and oils rising by 18.5% to 19.5%, sugar and sweets are predicted to increase between 10% and 11%, while nonalcoholic beverages prices are predicted to increase between 10.5% and 11.5%.
Areas were USDA trimmed forecasts: Beef and veal prices are now seen rising 5% to 6% versus their October outlook for increases of 5.5% to 6.5%, while dairy product prices are now seen up 11.5% to 12.5% compared with 12% to 13% in their October forecasts. “Beef and veal prices declined by 0.8% in October 2022 and were 3.6% lower than October 2021,” USDA said, noting they were the “only food category to experience a decline year over year.” But that is coming off of large increases in 2020 and 2021.
USDA held with its forecasts for all food prices to rise 3% to 4% in 2023, with increases for grocery store prices of 2.5% to 3.5% and restaurant prices of 4% to 5%. Despite being down sharply from their forecasts for 2022, the levels remain well above the 20-year average for all food prices to rise 2.4%, grocery prices to be up 2% and restaurant prices to increase 2.9%. No food categories are expected to see double-digit-percentage increases in 2023, with flat prices for fresh fruits and vegetables; no food categories are currently forecast to decline from 2022 levels.
USDA extends comment period for livestock, poultry proposed rule on competition... USDA extended the comment period for 45 days on livestock, poultry proposed rule on competition under the Packers and Stockyards Act (P&SA). The comment period now ends on Jan. 17, 2023. Several groups and lawmakers have been urging USDA to extend the comment period as the original 60-day-comment-period close of Dec. 2 approached. The National Cattlemen’s Beef Association (NCBA) welcomed USDA’s decision but urged the agency to “tap the brakes” on its entire rulemaking process under the P&SA given that this rule, a prior one filed on the poultry tournament system and a yet-to-be released rule are linked and need to be considered together.
