At a Glance
- A delayed corn crop, OPEC cuts and colder weather could impact the prices of some Thanksgiving staples
More than 55 million travelers have made plans to travel 50 or more miles away from home this Thanksgiving. According to AAA, 2019 will be the second-highest Thanksgiving travel volume on record. But the market never rests, even as we approach the holiday season.
The American Farm Bureau Federation released its latest cost of a Thanksgiving meal for the year. The 2019 price of $48.91 is up just a penny from 2018. But commodity markets have changed since last year in many areas that affect what we eat at the dinner table and beyond. Let’s look at the major commodities associated with the Thanksgiving holiday.
Gas prices have been fluctuating recently but are less than the national average this time in 2018. The fluid story of the U.S.-China trade war and OPEC production cut has kept oil prices in check, trading in a very tight range for the last few months.
WTI crude oil futures settled relatively unchanged in the week leading up to Thanksgiving after some big swings. Oil prices fell most recently on demand concerns before OPEC stated, through an anonymous source, that the current production agreement the cartel has with its allies will be extended until June.
This will be a very fluid storyline as Russia, Iraq and others have consistently “overproduced” leaving the burden of the cutbacks on Saudi Arabia, just ahead of the Saudi Aramco IPO. Under these conditions, consumers could be paying less at the pump this holiday season.
Oil costs may also affect air travel, at least in a small way. The Wednesday before and the Sunday after Thanksgiving are typically the most expensive days to travel, but actually flying on Thanksgiving offers the lowest fares as people usually don’t want to travel on Thanksgiving Day.
Homes need to be warm when family gathers around the dinner table. This is especially true in 2019 since much of the U.S. was hit with an Arctic blast to begin November. This caused natural gas prices to rise to their highest levels since March. Winter came quickly and prices jumped 20% from late October to early November, and nearly 25% since the lows during the summer.
However, relief is in store. Ample U.S. supplies have curtailed the rally and natural gas will most likely end the month with a loss. Natural gas prices haven’t posted a decline in November for four years, but that is likely to change this year as milder weather is expected for much of the U.S.
Corn is an essential input into many of the foods we eat at Thanksgiving, from turkey or ham to muffins and stuffing. Corn futures prices are almost exactly the same as they were for Thanksgiving 2018, and slightly higher than Thanksgiving 2016 and 2017. However, corn futures are down almost 20% from mid-June and midwestern corn farmers are well behind harvesting this year’s corn crop.
This year’s crop was planted late and the wet weather this fall has hampered the harvest. The corn market has largely been ignoring the delay and corn futures recently fell to a two-month low near $3.65 per bushel. The lower costs of corn today could have an impact on the future prices of some Thanksgiving staples.
There are no futures markets for turkey, but if we’re talking about Thanksgiving, we can’t forget the centerpiece of nearly every meal. The Farm Bureau says the average price for a 16-pound turkey for the 2019 holiday is $20.80, down 4% from 2018.
Thanksgiving is a busy time for many, and that includes the markets setting prices for all the things that make it a memorable holiday.