The food inflation strategies we outlined here and here and here may have sounded a bit gloomy, but considering what’s been happening in the commodity markets (inflation, weather-related disasters, and freezing conditions in Mexico), the well-timed strategies remain in place.
Now that Sysco has confirmed their prices are rocketing (which also means your food prices will head north), it’s about to get a lot worse for the millions already struggling to pay their outrageous food bills…
According to reports, you’ll pay double… even triple the price for produce within weeks thanks to a freeze that wiped out crops in Mexico and the southwestern US.
And, according to Zero Hedge, “Now might be a good time to hit the frozen foods (or fresh produce if you’ve got a vacuum sealer) aisle at your local grocery store and stock up on your favorite fruits and veggies, as there may be a severe supply crunch coming in the next couple weeks lasting perhaps several months.”
“Why pay premium prices later when you can prepare yourself today, before the rest of the country gets wind of it,” says Zero Hedge, as inflationary risks, supply problems, weather related incidents, and a recent freeze in Mexico that’s lead to an 80% and 100% crop damage makes life a bit more unbearable for companies that Sysco, which just released the following note:
ALL OF OUR GROWERS HAVE INVOKED THE ACT OF GOD CLAUSE ON OUR CONTRACTS DUE TO THE FOLLOWING RELEASE. WE WILL BE CONTACTING YOU PERSONALLY TO REVIEW HOW THIS WILL AFFECT OUR CONTRACTED ITEMS WITH YOU GOING FORWARD.
THE DEVASTATING FREEZE IN MEXICO IS WORST FREEZE IN OVER 50 YEARS…
THE EXTREME FREEZING TEMPERATURES HIT A VERY BROAD SECTION OF MAJOR GROWING REGIONS IN MEXICO, FROM HERMOSILLO IN THE NORTH ALL THE WAY SOUTH TO LOS MOCHIS AND EVEN SOUTH OF CULIACAN. THE EARLY REPORTS ARE STILL COMING IN BUT MOST ARE SHOWING LOSSES OF CROPS IN THE RANGE OF 80 TO 100%.
EVEN SHADE HOUSE PRODUCT WAS HIT BY THE EXTREMELY COLD TEMPS. IT WILL TAKE 7-10 DAYS TO HAVE A CLEARER PICTURE FROM GROWERS AND FIELD SUPERVISORS, BUT THESE GROWING REGIONS HAVEN’T HAD COLD LIKE THIS IN OVER A HALF CENTURY. THIS TIME OF YEAR, MEXICO SUPPLIES A SIGNIFICANT PERCENT OF NORTH AMERICA’S ROW CROP VEGETABLES SUCH AS: GREEN BEANS, EGGPLANT, CUCUMBERS, SQUASH, PEPPERS, ASPARAGUS, AND ROUND AND ROMA TOMATOES.
FLORIDA NORMALLY IS A MAJOR SUPPLIER FOR THESE ITEMS AS WELL BUT THEY HAVE ALREADY BEEN STRUCK WITH SEVERE FREEZE DAMAGE IN DECEMBER AND JANUARY AND UP UNTIL NOW HAVE HAD TO PURCHASE PRODUCT OUT OF MEXICO TO FILL THEIR COMMITMENTS, THAT IS NO LONGER AND OPTION.
WITH THE SERIES OF WEATHER DISASTERS THAT HAS OCCURRED IN BOTH OF THESE MAJOR GROWING AREAS WE WILL EXPERIENCE IMMEDIATE VOLATILE PRICES, EXPECTED LIMITED AVAILABILITY, AND MEDIOCRE QUALITY AT BEST. THIS WILL NOT ONLY HAVE AN IMMEDIATE IMPACT ON SUPPLIES, BUT BECAUSE OF VERY STRONG BLOSSOM DROPS, THIS WILL ALSO IMPACT SUPPLIES 30 – 60 DAYS FROM NOW.
SOME GROWERS ARE MEETING WITH THEIR BOARDS RIGHT NOW TO DETERMINE WHETHER THEY SHOULD IMMEDIATELY RE-PLANT, HOPING FOR A HARVEST BY LATE-MARCH-TOEARLY-APRIL, OR WHETHER THEY SHOULD DISC THE FIELDS UNDER AND WAIT FOR ANOTHER SEASON.
Source: Sysco Release/Memo: Mexico Freeze [PDF]
Worse, that note comes just days after Sysco suggested it’ll be forced to raise prices on foods “ranging from dairy to meats as a result of higher raw material costs and margin compression.”
Load up on the food-related stocks and sit tight… They should all pay off well.