Commodities & Metals

U.S. Consumers Continue to Pay More for Milk and Beef

Source: Thinkstock
The U.S. Department of Agriculture (USDA) released its preliminary report on March farm prices Friday afternoon. The all-products price index rose by 5 points month-over-month (4.7%) to 111, with the crop index up 2.2% and the livestock index up 5%. The preliminary March all-products index is up 0.9% year-over-year. The index uses prices from 2011 as its base value (100).

The USDA noted that March’s higher prices for broilers, hogs, corn and cattle offset lower prices for eggs, grapefruit, and sunflowers. Prices paid by farmers in the month remained flat at 107 for the second consecutive month, but are up 1 point compared with March 2013.

Both corn and wheat prices are significantly lower than they were a year ago. The big increases in farm prices have come in dairy and meat, both of which are sharply higher than they were a year ago. Dairy prices rose 1.6% in March and are now 33% higher than they were a year ago. Prices for pork and beef are up 5% month-over-month and 21% compared with March 2013.

Milk prices continue to rise the most. The March price of $25.40 per hundredweight is up $6.30, or nearly 33%, compared with the price in March 2013. The price is also up $0.50 month-over-month.

Prices for fed cattle posted a record high of $152.26 per hundredweight on Thursday, up $2.16 in a week and $24.50, or 19%, in a year. The short version of the story is that demand for beef is simply outstripping supply. Partly that’s due to exports and partly that’s due to the impact of the herd culling that went on a year or so ago.

The pig population has been hit with virus that could reduce the crop by as much as 3%, sending pork prices even higher than sky-high beef prices.

Here is how some agriculture-related ETFs are closed the week:

The Market Vectors Agribusiness ETF (NYSEMKT: MOO) closed the week up 1.8%. Shares closed on Friday up 0.77% at $53.93 in a 52-week range of $48.75 to $55.29.

The PowerShares DB Agriculture fund (NYSEMKT: DBA) traded up 2.17% for the week and closed on Friday at $28.43, in a 52-week range of $24.04 to $28.95. Shares posted an intraday high of $28.95 on March 13.

The Teucrium Corn Fund (NYSEMKT: CORN) closed Friday down 0.97% for the day but up about 1.5% for the week. The fund’s 52-week range of $29.50 to $43.00. That high price set last June and the trend on corn prices was down through the rest of last year and are down 17.7% over the past 12 months. Prices began to trend upward in January and are now up 10% year-to-date

The Teucrium Wheat Fund (NYSEMKT: WEAT) closed down 2.43% on Friday to finish the week at $16.47. For the week the fund was up 0.8%. The 52-week range is $13.31 to $19.50. Like corn, the price is up more than 12% since the beginning of the year and down 10.5% over the past 12 months. This fund trades averages just 41,000 shares traded in a day, but nearly tripled that on Friday, when wheat prices fell more than 2% on the CBOT to close at $6.955 a bushel.