In this weekly Commodities Watch column, John T. Barone, president and commodities analyst for Market Vision Inc., offers a snapshot of the state of commodities for restaurants.
Poor profit margins are taking a toll on dairy producers. The Sept milk-feed ratio was near record low at 1.46; well below the 2.0 level producers say they need to be profitable. Dairy cow slaughter has risen 5.8 percent year-to-date and has accelerated to a rate above 12 percent since summer.
The run-up in cheese prices has been from lows of $1.64 in mid-July to $2.10. The USDA is projecting cheese to average $1.69 for 2013. But this is likely $.06–$.08 on the low side.
Butter prices have been on a similar trajectory moving toward 2013, jumping from $1.52 in July to $1.95 last Wednesday and Thursday before falling to $1.86 on Friday. Dairy prices became much higher, much faster than expected. As a result, many retail buyers were caught scrambling to put on coverage for Thanksgiving. That extra demand accentuated the September price rise. The USDA’s current 2013 butter forecast, at $1.58, is also on the low side.
Contact John T. Barone at jbarone@mktvsn.com.
