The Weekender

September 15

Weekly Winners & Losers

Do oats know?

Up 7% on the week and 23% from mid-August:

Breakfast is breaking the bank.

Orange juice futures hit a new all-time high on Tuesday, trading above $5 per pound for the first time in history.

The market broke from its early-week highs but still finished slightly higher on the week. Futures are up 57% year-to-date and 200% from this point in 2022.

Wild to put the past few years in perspective with a 50-year chart:

Sticker shock

Genevieve and I swung through McDonald’s on our way to Husker Harvest Days last week and needless to say, I was floored that I had to pay $8.49 for an EggMcMuffin meal (after the $1.50 upcharge for OJ).

Plus - the fact that 3 pancakes sets you back $4.29 is insane to me. They have more tied up in the packaging than the cost to make the pancakes!

The hen that laid the golden egg:

Eggs remain at all-time highs for this point in the year and 4x higher than average:

(chart: UrnerBarry)

The US laying flock remains notably smaller than average due to continued bird flu losses, resulting in lower egg output and record-high prices.

The market is breaking though as consumers have tapped the breaks on purchases and flock rebuilding looks to continue into the new year.

I bought groceries last night… and I skipped right over the eggs.

I am short and thinking I will get a chance to cover at a lower price than “on sale” at $4.99 a dozen:

Costly caffeine

Coffee futures are surging too as concerns about dryness in Brazil are stoking fears of a crop failure.

Futures were up10% on the week and 38% year-to-date:

Friday’s close at $2.59/lb marks the highest settle since 2011:

Top dog

We are all quite familiar with Brazil’s dominance in soybeans - accounting for 40% of world production and nearly 60% of world exports each year.

Their presence in global corn markets is becoming more evident as well. Even though they only produce ~10% of the world’s crop, they account for one in every four bushels exported.

Soybeans and corn are far from Brazil’s only exports though as the South American giant is the world’s largest exporter at least seven food commodities, including breakfast staples like coffee (33%), orange juice (73%), & sugar (66%).

Rendered useful

Brazil also plays a key role in global protein markets as the world’s largest chicken exporter (overtaking the US for the #1 spot in 2020).

More importantly, Brazil is a huge player in beef - giving the US a run for its money.

While the US is technically the largest beef producer in the world (20% vs Brazil’s 19%), Brazil takes the cake on exports with a 26% marketshare vs the US at 10%.

Beef isn’t the only thing Brazil is exporting either as the US is importing Brazilian beef tallow at a record pace as a feedstock in renewable diesel production.

In fact, the US imported more than 400 million pounds of beef fat from Brazil in the first seven months of 2024, blowing by 2023’s full-year total with five months left in the year.