The government’s Consumer Price Index and Producer Price Index reports are forecasting a 6-to-7 percent increase in egg prices for consumers this year and a 36-to-37 percent price increase for producers.  But the reports also project a jump in consumer dairy prices this year by 0.5 to 1.5 percent while forecasting a 4-to-5 percent drop in farm-level milk prices and a 3-to-4 percent decline in wholesale dairy prices.

John Newton is an economist and the director of market information for the American Farm Bureau Federation. He told Agri-Pulse the higher egg price shown in the reports, released earlier this week, came as no surprise, given robust export demand for U.S. eggs, reduced supply due to an outbreak of avian influenza in South Korea earlier this year, and AFBF’s own consumer price data.

“We observed a similar phenomenon in our spring market basket survey of significantly higher egg prices for consumers,” Newton said.

What caught Newton’s eye in the reports is how milk and dairy prices are moving in opposite directions for consumers and producers, to the benefit of neither.

“It’s a reflection of a mature domestic market, but record milk production, and the challenge dairy producers are having in finding processing locations,” he explained.

Newton also pointed out the Producer Price Index report now forecasts a 10-to-11 percent increase in wheat prices for 2018, largely due to drought driving “the worst wheat crop conditions in a long time.”  Still, Newton emphasized that crop insurance will provide some relief to those wheat producers with substantial losses, and noted the extent of any potential losses is still speculative.

“There’s an old saying that ‘You can’t kill wheat,’” Newton said. “So we’ll have to see how actual production numbers come in.”

Meanwhile, the reports forecast a 2-to-3 percent decline in farm level fruit prices for 2018, and a 3-to-4 slide in farm level vegetable prices this year. However, consumer prices for fresh fruit this year are expected to increase by 2-to-3 percent, with consumer prices for fresh vegetables ranging between a half-percent lower and a half-percent higher.

Overall, the Consumer Price Index forecast consumers will pay 1-to-2 percent more for all food in 2018. Prices for food at home are expected to rise between a half-percent-to-1.5 percent, with food away from home expected to cost 3-to-4 percent more.