Why food prices won’t fall as fast as gas prices (about a 6 mo delay beforethe lower oil prices

[Bill USA]

... impacts food commodity prices)


http://www.marketwatch.com/story/why-food-prices-wont-fall-as-fast-as-gas-prices-2015-01-29

Americans who are benefiting from lower gas prices could see some food prices fall, especially dairy and meat products, but the rate of decline will be at a far-slower pace than the recent plunge in the price of gasoline, commodity traders and insiders say.

Just six months ago, oil prices were well above $100 a barrel, partially as a result of unrest in Iraq and fears of supply interruptions. Now, as the U.S. may supersede Saudi Arabia as the world’s biggest oil producer, concerns over world economic growth (outside of the U.S. economy, which actually appears to be breaking out of a sub-par recovery) oil prices have plunged. West Texas Intermediate crude oil prices for the week ending Jan. 26, 2015, fell to $45.15 a barrel, down 53% from a year ago.

As a result, gasoline prices nationally have fallen 38% from the same period last year, down $1.25 on average, to $2.04 a gallon, for the week ending Jan. 26, according to the U.S. Energy Information Administration.

Farmers and ranchers benefiting from declining prices for fuel could lower the prices for commodity food items such as milk, eggs, pork and beef, just not right away or commensurate with the fall of gas, said Patrick Sullivan, a commodity trader at Great Lakes Trading Co., in Warsaw, Ind. “It could take a while to trickle through but we could see some lower food prices in six to eight months,” Sullivan said. “If fuel stays where it’s at, it will lower costs of farmers’ production and that could adjust everything down,” he said.
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