Christmas with family is priceless, but turkey and ham dinners are pricier this year

Spend Matters welcomes this holiday guest post from Mintec, which provides thousands of food commodity prices and helps brands manage spend with Mintec Analytics.

Sharp rises in meat and potato prices are likely to affect the cost of a typical Christmas dinner in the U.S. this year. The decline in prices of cranberries and turnips are not enough to offset the rises in turkey, ham, potatoes, carrots and sweet potato prices.

The Mintec U.S. Christmas Dinner Index for a turkey dinner has risen by 6% year on year, but ham dinners have risen by a whopping 19% year on year.

It may be small consolation, but the Gingerbread Index has increased by a comparatively measly 1% y-o-y.

                                                                                                            Source: Mintec Analytics

Analysis by Ingredient

We will start by looking at the main components of the Christmas Turkey Dinner and Ham Dinner index.

Turkey

Mintec’s U.S. turkey prices increased by 16% y-o-y in November due to decreased slaughter rates (-1.8%) in September and higher export demand. The U.S. turkey exports in September increased 13% y-o-y, and year-to-date exports were up 7% compared to the same time a year ago.

Ham

Mintec’s U.S. pork prices have been trending high since March 2019 and are currently up 66% y-o-y, driven by an increase in export demand as a result of the African swine fever (ASF) outbreak in China that reduced production there. Pork exports to China increased by 249% y-o-y in September.

Vegetables

Strong export demand in 2019 has strengthened U.S. potato prices. Consequently, in November 2019, Mintec’s U.S. potato prices were up 36% y-o-y. The impact of the increased export demand was aggravated by a 15-20% drop in potato output in Idaho, which accounts for 32% of the U.S. potato production.

U.S. sweet potato prices increased considerably by 45% y-o-y in November, as a result of the low U.S. crop in Q1 2019.

Also, excessive rainfall during the carrot harvest season impacted the supplies of carrots on the U.S. market, supporting a 22% y-o-y increase in carrot prices.

U.S. turnip prices are currently down 36% compared to the unusually high prices seen during the same period in 2018. The turnip prices in 2018 were up due to the unseasonal weather conditions in the U.S. that was responsible for a delayed and poor crop. However, turnip prices have risen seasonally 8% m-o-m in November.

Cranberry Sauce

Let’s not forget a favorite when it comes to Christmas: cranberry sauce, which combines the dryness of the cranberries with the sweetness of sugar and the sharpness of orange juice. In the index, cranberry prices recently took a sharp drop.

Source: Mintec Analytics

Cranberry prices are down nearly 19% year on year, due to slow sales of cranberries in export markets in the last few years and driven by increased global production.

U.S. domestic sugar prices on ICE New York are up 7% y-o-y, as the supply from most producing countries (Thailand, EU, India) is expected to further decline in 2019-20. However, sugar prices are still historically low, as a result of large stocks and more moderate growth in consumption in key consuming countries.

Frozen orange juice prices on ICE are down 26% y-o-y on the back of sharp production spike in the U.S. and an increased stock-to-use ratio. These factors have resulted in the price of cranberry sauce falling 18.5% y-o-y.

Gingerbread

Christmas wouldn’t be complete without some gingerbread cookies or other treats. While the Gingerbread Index is also up, these rises are mild compared to the main course.

                                                                                                            Source: Mintec Analytics

Sugar

As mentioned above, U.S. domestic sugar prices on ICE New York are up 7% y-o-y, but they are still historically low as a result of large stocks and more moderate growth in consumption in key consuming countries. The upward trend is likely to continue as the global balance sheet shows an expected shortage in sugar supply until spring 2020.

Butter

U.S. butter prices on the CME are down nearly 5% year on year as a result of a build-up of inventories and falling costs of cream. In addition, U.S. butter prices are at a substantial premium over other major producers, resulting in low export demand exacerbated by a strong U.S. dollar.

Flour

The U.S. wheat flour price has been trending up since September to nearly 1% higher y-o-y. Earlier in the year, expectations of a larger crop in 2019-20 had depressed prices; but concerns over cold weather in Minnesota and North Dakota contributed to a rise in prices during September and October.

Spices

Despite being stable for most of the year, ginger prices have risen 16% y-o-y in the last few months over concerns of high monsoon rains in India, the largest producer, reducing production. Allspice prices have increased by 35% y-o-y, but the effect on the gingerbread cost has been lessened by falls of 16% and 1% in the prices of cinnamon and nutmeg respectively.

Conclusion

The typical U.S. Christmas dinner is likely to be more expensive this year, compared to a year ago due to higher demand for U.S. meat and poor weather affecting the supply of some of your favorite seasonal vegetables during the year. While the cranberry sauce may be cheaper than last year, it is not enough to outweigh the rises in the meat and vegetable prices.

The picture is slightly brighter for the gingerbread treats. Gingerbread prices have increased due to price rises in sugar, flour and butter, but this has been moderated by falls in the price of the all-important spices, resulting in a small 1% rise in the overall price.