Spot food prices up 19% so far in 2014


Are food prices rising where you are? I often have lunch and coffee at @YC. Owner John tells me milk just rose $1.50 a gallon and bacon spiked from $32 to $42. He may have to raise prices.

What happens when pent-up demand (from a frosty east coast emerging from its hibernation) bumps up against a drought-stricken west coast unable to plant to meet that demand? The spot price (not futures speculation-driven) of US Foodstuffs is the best performing asset in 2014 – up a staggering 19%…

Spot prices are set by futures prices (not the other way around). Increased futures prices for food means traders are betting prices will rise. Morgan Stanley says the recent spike in prices will be short-lived. I’m skeptical, since they do not appear to be factoring the California drought into their calculations. If the drought continues, prices for vegetables, fruits, nuts, and beef will soar.

This of course hits the poor hardest. Vendors are already finding sneaky ways to disguise rising food prices, like decreasing the weight of a product, adding junk filler to it, and lowering the quality.