Peanut-Butter Price Surge in Store for U.S.: Chart of the Day
April 26 (Bloomberg) -- David Strasser, an analyst at Janney Montgomery Scott LLC, discusses the outlook for food prices and the potential impact on U.S. retailers. Strasser speaks with Margaret Brennan on Bloomberg Television's "InBusiness." (Source: Bloomberg)
Peanut butter may soon reach its highest price in more than a quarter century on U.S. supermarket shelves as manufacturers pass along cost increases, according to Judy E. Hong, a Goldman Sachs Group Inc. analyst.
The CHART OF THE DAY shows the monthly average retail price of creamy peanut butter since 1984, as compiled by the Commerce Department. The arrow depicts the 20 percent increase that’s necessary to offset higher costs for peanuts, sweetener and plastic jars, cited by Hong in a report two days ago.
Prices would have to rise 10.3 percent, or about half as much as Goldman projected, to surpass their peak of $2.208 a pound in April 1991.
Contract prices for peanuts harvested in October have jumped 40 percent to 50 percent from a year earlier, the report said, citing unnamed industry participants. Prices posted weekly by the Agriculture Department have surged 74 percent.
J.M. Smucker Co. “has the most to lose” from these increases, Hong wrote, largely because peanuts are the company’s third-biggest commodity expense. Smucker suspended production on eight versions of Jif peanut butter until at least October, the Omaha World-Herald reported last week. The company declined to comment to the paper.
Hershey Co. (HSY), the maker of Reese’s peanut-butter cups, also may suffer financially because peanuts are the company’s fourth- biggest raw-material cost, the report said. ConAgra Foods Inc. (CAG), which produces Peter Pan peanut butter, and Kraft Foods Inc. (KFT), which makes Planters peanuts, will be hurt less in Goldman’s view because they sell a wider variety of products.
To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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