In context, this price may seem like a one-off seasonal spike and quite high given where peanuts usually hang out -- under $1,000 per metric ton for around half of the past thirty years of traded history. Yet similar spikes have happened in the past. 1990 saw peanuts test nearly identical levels to today. And consumer price increases -- which we'll get to in a minute -- followed then as they will now. Yet this time around, the primary reason for the price increase has little to do with general commodity inflation elsewhere -- or a fundamental shift in demand and consumption patterns. No, the main reason we're seeing booming prices is due to a poor harvest -- the classic peanut culprit that makes the poverty sandwich more expensive in a somewhat cyclical, weather-driven commodity market.
Earlier today, the Chicago Tribune suggests that popular food brands are reacting quickly this time by passing along their own price increases to consumers. To wit, "Kraft will raise prices for its Planters brand peanut butter by 40 percent starting Monday, while ConAgra has instituted increases of more than 20 percent for its Peter Pan brand that went into effect this month. J.M. Smucker, which makes Jif, will introduce price hikes of around 30 percent starting Tuesday."
Yet because the stuff keeps for quite some time -- preserving the bugs and all that -- well-advised consumers with a few minutes on their hands should flock to stores before next week to stock up on the stuff. Like timberlands (which don't need to be harvested when prices are low) peanut butter is one of those cabinet commodities that allow us to truly stockpile inventory levels. As a final thought as you forecast your own working capital requirements before raiding the shelves of lower-price Jif, after the spike of 1990, which saw prices rise over $1,750 for groundnuts on a metric ton basis, the market crashed to under $664 per metric ton later the following year.