Great American Group Inc. market analysts say consumers currently are paying higher-than-average prices for dairy and meat products as the 2012 summer drought continues to play out in the marketplace.
During the drought, animal feed costs soared to historic highs, forcing many producers to cull their herds, notes Ken Bloore, chief operating officer of Great American Group's advisory and valuation services division.
The drought conditions that plagued U.S. crops last year appear to have largely abated, and farmers are now reporting favorable growing conditions in most sections of the country, Great American Group officials say. USDA is expecting a corn harvest of 13.95 billion bushels this year, an increase of 29 percent from 2012 and an all-time record. This should translate into lower prices for animal feed, which in turn would enable farmers to restore their herds to normal levels.
"A return to normal feed prices would result in ample supplies of animal-based products such as meat and dairy," Bloore said. "As a result, food prices could be expected to experience only minimal inflation next year."