This Thanksgiving, President Joe Biden and his administration have a message for 300 million Americans: No turkey for you! It will be a morose holiday season in 2022, as not only are households contending with rampant food inflation and investment portfolios covered in red ink, but they will also need to endure scarcity and shortages of a dinner table’s famous centerpiece. A combination of factors is impacting the food supply, so brace yourselves for opening up a can of overpriced spam and munching on dinner rolls during annual festivities.
No Gobbling Up a Turkey This Year
Speaking in a recent call with reporters, Agriculture Secretary Tom Vilsack warned that finding 20-pound turkeys at supermarkets in many regions of the country might prove to be as challenging as understanding Bidenese. “Some of the turkeys that are being raised right now for Thanksgiving may not have the full amount of time to get to 20 pounds,” he said, adding that shoppers might need to settle with a smaller bird since “it’ll be there.”
One of the chief factors for this environment has been the persistent outbreak of the highly pathogenic avian influenza (HPAI) virus, also known as the bird flu. While this illness has been typically ubiquitous in the colder months, commercial turkey producers had seen the flu in July, when they started raising flocks for Thanksgiving and Christmas.
Moreover, turkey feed prices have soared more than 8% this year, hurting poultry farmers’ margins. This is in addition to skyrocketing energy, fertilizer, and labor costs. As a result, the price and inventory levels of turkey, chicken, and eggs have been significantly affected.
Overall, from white potatoes to whole milk to butter, Thanksgiving is going to be more expensive this year, as grocery store prices have increased at an annualized rate of 13%. Is this why a quarter of Americans intend to skip Thanksgiving dinners this year?
Central Banks Are in Love Again
Central bankers are singing the classic Cole Porter tune, “I’m In Love Again.” According to a new report from the World Gold Council (WGC), central banks purchased 399 tons of gold in the third quarter, totaling approximately $20 billion. The last time these institutions purchased the yellow metal at this pace was when Mrs. Robinson was seducing Dustin Hoffman, and the Boston Red Sox lost to the St. Louis Cardinals in the World Series. The largest buyers were Turkey (31 tons), Uzbekistan (26 tons), India (17 tons), and Qatar (15 tons).
In total, international gold demand returned to pre-crisis levels in the July-September period, says Louise Street, the senior markets analyst at the WGC.
“Despite a shaky macroeconomic environment, demand this year has reflected gold’s status as a safe haven asset, underscored by the fact that it has outperformed most asset classes in 2022,” she said in a statement. “Looking ahead, we anticipate central bank buying and retail investment to remain strong and that could help offset potential declines in OTC and ETF investment that may prevail if the dollar strength persists. We also expect to see jewelry demand continue to perform strongly in some regions such as India and Southeast Asia, while the technology sector will likely witness further decline in the face of economic deceleration.”
Gold prices have been hammered this year, plummeting about 8% year-to-date. The precious metal has suffered from a strengthening US dollar and rising Treasury yields. A stronger buck makes dollar-denominated commodities more expensive for foreign investors to purchase, while a high-rate environment lifts the opportunity cost of holding non-yielding bullion. Despite gold being a safe-haven asset during inflationary climates, the metal commodity has failed to glitter in 2022. Still, compared to other components of the market, gold is performing better this year.
Running Out of Diesel
The national average for a gallon of diesel is north of $5, according to the American Automobile Association (AAA). This is up about 46% from a year ago, and, considering the supply issues forming nationwide, prices could flirt with $6 this winter.
Diesel inventories have plummeted to just 25 days and are slumping roughly 20% below the five-year average for November. US stocks are the lowest they have been since 1951, and the biggest concern is in the northeast, a part of the country that typically burns more fuel than the rest of the nation. Because of these trends, the Energy Information Administration (EIA) warned that home heating bills could surge an estimated 27% this winter. “Our forecast for heating oil margins this winter reflects price pressures that have currently been affecting the U.S. distillate market, including low inventories, low imports, and limited refining capacity,” the EIA stated.
Volatility is so intense on the east coast that fuel supplier Mansfield issued an alert:
“East Coast fuel markets are facing diesel supply constraints due to market economics and tight inventories. Because conditions are rapidly devolving and market economics are changing significantly each day, Mansfield is moving to Alert Level 4 to address market volatility. Mansfield is also moving the Southeast to Code Red, requesting 72 hour notice for deliveries when possible to ensure fuel and freight can be secured at economical levels.”
While the White House will inevitably blame the refineries, these facilities are doing their best to mitigate the situation. Eastern refinery utilization stands at 102.5%. Americans are fortunate enough that temperatures are above seasonal averages, but if Old Man Winter imposes his will at any point, a diesel crisis will be born. Please pray for global warming.
