Again at this moment the market could care less just as it cared less at record highs in 2007 (the Fed was cutting rates and would save us from that silly subprime issue!) when all was good in the world but commodity inflation was surging. We seem to be almost at an identical structure perhaps at summer/fall 2007 pricing levels in some commodities (while others are already more like summer 2008 prices before things collapsed). This is like the movie Groundhog Day. The big lever remains crude oil as it feeds the entire global transportation chain - so far it has 'only' hit $90. About $20-$25 from here and I would express extreme caution about the effects to the consumer, especially the American kind.... but we're already seeing flash points circa 2008 in foodstuffs. Go stock up on bacon.
- Virginia-based Smithfield sells ham, bacon and sausage to supermarkets and fast-food chains. It is the No. 2 U.S. maker of deli meats. Company brands include Armour-Eckrich, Farmland and John Morrell.
- Smithfield’s financial turnaround is gaining strength as pork prices have gone up with a sharp reduction in herd sizes. This has driven up lean hog prices in the futures market. Pork exports also have increased, spurred by the weak U.S. dollar.
- Smithfield said average prices for the fresh pork it sells jumped 24%, while packaged-meat prices rose 19%.
- Live hog prices jumped 56%.
Speaking of Spam - believe it or not, I wrote about that in 2008 as well ... Spam sales surged when there was 'no inflation' in 2008. [May 29, 2008: To Laugh or Cry - Spam is Hot] And lo and behold, the maker of Spam is surging....coincidence? Nah, there is no inflation after all.