April 11, 2025 • 20 mins
When it comes to measuring economic pain, the cost of a humble breakfast sandwich might not be top of mind. But Bloomberg has an index that tracks the rising cost of a bacon, egg and cheese sandwich, plus a cup of coffee. And this year, it’s reached record highs.
On today’s Big Take podcast, we hear from people up and down the BEC supply chain — from a wheat farmer to a coffee roaster to a guy who turned his life-long love of eggs into a career. What does the most important meal of the day tell us about inflation, supply and demand, and the complexities of financial markets? More importantly: how did this sandwich get so expensive?
Follow the BEC Index on the Bloomberg Terminal: {ECAN US BEC<Go>}
Read more: A Classic New York Cheap Breakfast Hits $8 on Steep Eggs Prices
Further listening: Why Eggs Are So Expensive Right Now
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
Hi, good Herdon.
Speaker 3 (00:11):
For the last few years, whenever I've needed a little
extra morning sustenance, I visited a food cart outside the
Bloomberg office. Could I have a egg and cheese sandwich,
extra cutup, salt and pepper, please.
Speaker 4 (00:24):
Egg and cheese ease a five dollar?
Speaker 3 (00:28):
It used to be three fifty.
Speaker 4 (00:30):
Or they actually says thanksy.
Speaker 3 (00:33):
It must have been a while since I stopped by
the cart, because Karen Hidalgo and her coworker Francisco told
me two months ago they had to raise prices. Their
egg and cheese sandwich on a roll went from three
point fifty to five dollars, and their bacon, egg and
cheese has reached six dollars. Add in the cost of
a cup of coffee and a tip, and my once
(00:54):
reliably cheap breakfast just ran me seven bucks. It's not
just my beloved breakfast cart. Bloomberg actually tracks the price
of the key ingredients in a bacon, egg and cheese
plus a cup of coffee on a special bacon, egg
and cheese index. It's updated every month using data from
the Bureau of Labor Statistics or the BLS, and this year,
(01:19):
the index has reached record highs.
Speaker 1 (01:21):
Our breakfast foods are very consistent consumer staples, and so
they sort of become outsize indicators of inflation.
Speaker 3 (01:30):
Aileena Pang covers agriculture and commodities for Bloomberg.
Speaker 1 (01:34):
Even though economists really like to look at the rate
of inflation, as a consumer, you tend to think, oh,
my coffee costs this much today, and my coffee used
to cost that much five years ago.
Speaker 3 (01:45):
In March twenty nineteen, the commodities that make up an
average BC plus a coffee cost almost a dollar ninety.
If you adjusted for inflation, that means the meal should
cost nearly two forty today, but as of March twenty
twenty five, it three dollars three twenty three to be exact.
So the story of why these foods have gotten so
(02:06):
expensive isn't just about inflation. It's also about supply and demand.
Speaker 5 (02:12):
When my customers complained to me recently at the price
of gouging, you're gouging.
Speaker 3 (02:17):
Global weather patterns and.
Speaker 6 (02:19):
Disease, experienced veterans would tell me, like, young man, we've
seen everything that could possibly happen in the egg marketing.
Speaker 3 (02:26):
Land wars, and trade wars.
Speaker 4 (02:28):
We're used to handling the natural barriers. The man made ones,
we kind of struggle.
Speaker 3 (02:32):
With them, you know, the winds of consumers and the
complexities of financial markets. Now, as Trump's sweeping tariff orders
send shockwaves through the global economy and put new pressures
on domestic commodities markets, we wanted to look closer at
one sandwich that helps explain it all. Today on the show,
(02:55):
we talk to people up and down the bacon, egg
and cheese supply chain, from a Kentucky week farmer to
a VP at an egg brokerage, to a coffee roaster
in Lower Manhattan, and along the way. Bloomberg's expert commodities
reporters helped us make sense of how this sandwich got
so expensive and what it says about the American economy, tariffs, inflation,
(03:16):
and more. This is the big take from Bloomberg News.
I'm Sarah Holder. If you had to pick one ingredient
to blame for the rising costs of a breakfast sandwich,
it'd probably be eggs.
Speaker 6 (03:35):
Eggs have a weird pulse on the economy.
Speaker 3 (03:39):
Brian Muskajeri has worked in the egg industry for over
a decade. He's currently a vice president at an egg
brokerage called Eggs Unlimited. It also helps farms distribute their
eggs to retail customers.
Speaker 6 (03:51):
When I got into the egg industry, my mom said, like,
somehow you belonged in this industry. You just always loved eggs.
Speaker 3 (03:57):
Right now is a rough time to be an egg lover,
as anyone who's been to the grocery store recently knows,
the price of eggs has been uncomfortably high. The most
recent data we have shows that consumer prices in March
hit a new record over six twenty a dozen, double
what eggs cost a year ago. Most people know, or
(04:19):
think they know, what's behind that high price, bird flu.
Since late last year, a new wave of avian influenza
has been tearing through American egg farms, killing off tons
of egg laying hence.
Speaker 6 (04:32):
Fifty million of three hundred and twelve million, you know,
since the start of October. It's just an unprecedented supply
loss than those prices have been passed along to the consumer, But.
Speaker 3 (04:42):
There may have been other dynamics pushing up the price
of eggs. The Department of Justice has opened a probe
to investigate potential price fixing by egg sellers and consumer
reactions also had an impact.
Speaker 6 (04:54):
It created panic buying and hoarding, and the consumers are
maybe buying more eggs than they typically bought, which just
kind of fed into the show rang a little bit more.
Speaker 3 (05:01):
But consumers have hit their price ceiling since February, They've
stopped buying as many eggs, and wholesale prices have started
to fall. Consumers just haven't felt that yet. The second
most important part of the bacon, egg and cheese, in
my opinion, is the bread. Bread has also outpaced inflation
(05:23):
since twenty nineteen. And to make bread, you need wheat.
Speaker 4 (05:27):
If you're flying around the country in the winter and
you say something beautiful and green amidst all the brown
and gray, that's a wheak field.
Speaker 3 (05:37):
That's Pat Clements, a second generation wheat grower and president
of the National Association of Wheat Growers. When America's beautiful,
green wheat fields are thriving, that doesn't always mean America's
wheat farmers are making more money. Walk me through how
you set prices.
Speaker 4 (05:54):
The issue is we don't set them, we take them.
Market prices for wheat can vary pretty widely over the
course of a year, and.
Speaker 3 (06:01):
From year to year, US wheat prices are heavily influenced
by two dominant global suppliers, Russia and Ukraine. When those
countries are cranking out wheat, the prices US farmers get
are lower When Russia and Ukraine's supplies strained, growers here
can make more so. Back in twenty twenty two, just
after Russia's ground invasion of Ukraine, prices shot up.
Speaker 4 (06:25):
That was one of the last big run ups in
the price of wheat.
Speaker 3 (06:30):
In January twenty twenty two, wheat was trading at about
seven to fifty a bushel. In March, after Russia's invasion,
it spiked, surpassing thirteen dollars a bushel, but it was
a short lived jump. Russia and Ukraine found ways to
keep supplies flowing, and that, combined with reduced demand in
the US, has driven down the prices wheat farmers are
(06:51):
getting for their product. A bushel of wheat is now
trading at around five forty.
Speaker 4 (06:56):
In the meantime, our input costs have risen back oh
Watch day twenty five to fifty, depending on which particular
item you're talking about.
Speaker 3 (07:06):
Pat says the costs of pesticides, fertilizers labor and equipment.
They're all up, and farmers fear that squeeze could get
even worse depending on how Trump's trade war goes.
Speaker 2 (07:18):
That's the sort of million dollar question.
Speaker 3 (07:20):
Michael Hertzer covers commodities for Bloomberg.
Speaker 2 (07:23):
Prices could change pretty dramatically depending on how all these
tariff negotiations go.
Speaker 3 (07:28):
Almost half of US wheat is exported. Mexico is our
biggest wheat buyer, and right now the country has escaped
the worst of Trump's tariffs. But if that changes, and
if Mexico retaliates, that could hit US wheat producers hard.
Speaker 4 (07:44):
To interrupt the supply to a dependable nearby neighbor, you
just can't imagine anything worse for the industry.
Speaker 3 (07:52):
From the ground in Kentucky, Pat says farmers are nervous
that the trade wars could drive business away.
Speaker 4 (07:58):
When you interrupt these small markets, someone is waiting to
take our place, perhaps some South American country we'll ship
into Mexico. Perhaps it'll be Russia, Perhaps you know, can
come from anywhere in the world.
Speaker 3 (08:12):
Tariffs could also drive up other costs of doing business,
not just for wheat farmers, but all the way up
the bread supply chain. That's on top of costs that
have already been rising and driving up the cost of bread,
labor costs, packaging, transportation, marketing.
Speaker 4 (08:28):
A loaf of bread that costs four dollars and a half.
The farmer's share of that it's fourteen cents. Our part
isn't moving the need.
Speaker 3 (08:39):
So we've covered eggs and bread. What about cheese? For
that we had to call one of our experts.
Speaker 1 (08:46):
We typically watch Class three milk futures. That's like the
class of milk that typically goes into cheese.
Speaker 3 (08:51):
That's Bloomberg's I lean up. Hang again. She follows the
cheese market, and she says prices have been relatively stable
in recent years. That's despite a cheese craze that started
during the pandemic, and.
Speaker 1 (09:03):
That trend has just sort of accelerated, and it's really
been a boon to the broader US dairy industry, just
because fluid milk is no longer as popular as it
once was at its peak, and so now what the
dairy industry likes to say is that people are eating
their milk instead of drinking it.
Speaker 3 (09:21):
Since the increased demand for cheese has been offset by
increased production, the cost of this domestic dairy product has
remained relatively low. But we also get some of our
fanciest cheeses from the European Union.
Speaker 1 (09:35):
They make a lot of the high grade specialty cheeses
that everyone loves.
Speaker 3 (09:39):
I'm not sure most of us order breakfast sandwiches with
imported French bree, but if you are, watch out. The
European Union is subject to the US as ten percent
tariff on imports. A more traditional pick might be American
cheese produced right here in the US, but the US
also exports a lot of cheese products. More than half
(10:00):
of US dairy exports go to Mexico, Canada, and China.
Canada has already put retaliatory tariffs of twenty five percent
on American cheese, butter, and dairy spreads, while China's levied
one hundred and twenty five percent duties on all US imports,
which would include dairy products. What if Mexico were to follow.
Speaker 1 (10:21):
Mexico is by far the biggest buyer of American dairy products,
and so there is concern there that if Mexico were
to retaliate by putting tariffs on US cheese, then that
would take away a market for US farmers.
Speaker 3 (10:34):
Overall, though, Aileena sees domestic cheese prices staying pretty calm
amid broader tariff turbulence. So we've tackled eggs, bread, and cheese.
But what's going on with the last two pieces of
this breakfast puzzle bacon and coffee? That's coming up. We've
(11:03):
been digging into why a classic American breakfast combo, the bacon,
egg and cheese sandwich plus a cup of coffee, is
getting more expensive in the US, and how those prices
could fluctuate further under Trump's trade war. We've covered the bun,
the e, and the c. Now let's bring home the bacon.
(11:24):
Bloomberg Commodities reporter Michael Hertzer told me that understanding bacon
prices actually starts with beef.
Speaker 2 (11:31):
The US beef cattle herd is the lowest since the
nineteen fifties, so beef is in pretty tight supply, and
one of bacon's keys to popularity has ben. It's always
been something of alternative to beef.
Speaker 3 (11:45):
In the past few decades, bacon has been heavily marketed
by restaurants and food companies who wanted to sub in
pork because beef was so pricey, and all that exposure
has helped bacon evolve from strictly a breakfast side to
something you see on salads, on burgers, any meal of
the day. All this drives up demand, but.
Speaker 2 (12:05):
Supply bacon is cut from the pork belly and there's
a sort of a finite amount of it. Each pig
only has one belly in Because it's so popular, bacon
has a sort of built in demand base, so.
Speaker 3 (12:18):
US consumers have spent decades driving up the cost of
bacon by buying more. Today it costs almost seven dollars
a pound, but Trump's policies could change that.
Speaker 2 (12:29):
A lot of the folks working inside the meat plants
are immigrants, and any sort of deportation efforts could have
a tangible impact on just the number of workers that
are available or the number of workers that are willing
to show up if they're in fear of being taken away.
Speaker 3 (12:47):
And once again, tariffs could upend everything.
Speaker 2 (12:50):
Mexico is the top buyer of US pork, and them
not having a tariff will allow US pork to continue
to go to Mexico. If that changes, theoretically, pork could
become cheaper in the US if Mexico is buying less.
Speaker 3 (13:06):
In the short term. Pork prices could drop if the
supply of pork exceeds the demand, but Michael thinks farmers
would adapt raise fewer pigs, bringing the price back up
in the medium term. So we're down to the last
ingredient in our breakfast. Order something to wash it all down.
I'll go Burista's Choice coffee.
Speaker 5 (13:30):
These increases over the last six months have been monumental,
and they've been fast.
Speaker 3 (13:36):
That's Peter Longo, the owner of Porto Rico Importing Company,
a coffee shop and roaster in New York's Greenwich Village.
The store has been around since nineteen oh seven, and
Peter took it over from his parents in the seventies.
And how much was a cup of coffee at that time?
Speaker 5 (13:52):
Oh man, a cup of coffee? What's a dime? Maybe?
Speaker 3 (13:55):
Yeah, coffee hasn't cost a dime in deck gates. But
in the past year coffee prices have truly been on
a tear. Today a pound of beans costs Peter about
four dollars. That's nearly double what he was paying last year.
Speaker 5 (14:12):
Things that are causing price increase is scarcity, fears of
weather changing, of the temperature. Global warming has affected farming
a lot.
Speaker 3 (14:25):
A drought in Brazil damaged bean supply in the world's
top producing country.
Speaker 5 (14:30):
But I think the speculative investment has boosted the price
of coffee and made it more volatile.
Speaker 3 (14:42):
Speculative investment, in other words, economic forces beyond supply and demand.
To understand how markets influence coffee prices, we had to
call back Eileena Pang, the agriculture reporter we heard from earlier.
She told me there are two groups of people who
get involve in coffee markets. There are commercial traders.
Speaker 1 (15:03):
People who have a steak in the market, so like
you're a coffee roaster, you're a coffee producer, you are
a coffee trading house. And then there are speculative traders,
like the hedge funds, and their goal is not to
take delivery of beans. Instead, they want to play the
coffee market kind of like the stock market, buying futures
at a certain price, hoping that they'll be able to
(15:24):
sell them for more than they bought. The thing is
that right now, the roasters, the coffee houses, the people
who do want to actually buy coffee and actually take
delivery of it, they've been cautious, trying to buy just
what they absolutely need and nothing more, hoping prices will
come down. The traders aren't willing to keep a bunch
(15:45):
of coffee on hand unless they know they have a
roaster to sell it to, and companies like Starbucks and
big roasters, who would normally buy a lot in advance,
are kind of reluctant to do that.
Speaker 3 (15:57):
And since there are fewer buyers in the market right now,
any activity can make prices fluctuate wildly. Tariffs are making
the coffee market even more volatile. Last week, the US
hit the world's second biggest grower, Vietnam, with levies of
forty six percent. This week, Trump announced who his pausing
that tariff at least for ninety days, but his universal
(16:19):
ten percent tariff still applies.
Speaker 1 (16:21):
Importers are already trying to get clauses into their contracts
so that those costs get passed on to coffee roasters,
and eventually there is a sense that that would make
it to the consumer level.
Speaker 3 (16:34):
Traders are now expecting bean prices to get even higher,
so high that consumers might eventually start buying less coffee,
which could force prices down. All this weighs on coffee
sellers like Peter, who's now selling a pound of beans
for sixteen to ninety nine, up a whole dollar since September.
Speaker 5 (16:54):
There's only a finite point to which you can raise
your prices before to fix your sales.
Speaker 3 (17:02):
After all these conversations about all these different commodities, you
might be noticing some trends we did. Bacon, cheese, and
bread prices are either stable or slightly elevated, but coffee
and eggs prices are up a lot. Those two ingredients
have been driving a lot of the increases in Bloomberg's bacon, egg,
(17:22):
and cheese index, and even though market and wholesale prices
were expected to decline for those commodities, the relief hasn't
hit consumers, and now tariffs have created a whole new
level of uncertainty about where these prices are headed next.
Speaker 1 (17:38):
The bacon, egg, and cheese index we have is a
little bit backwards looking.
Speaker 3 (17:43):
Remember the index is based on data from the Bureau
of Labor Statistics. It's not a snapshot of where prices
are today or tomorrow, but where they were last month.
That's the way US inflation data works too, and why
it can sometimes feel like the fed's latest CPI figures
don't perfectly reflect Americans' experiences of the economy, and inflation
(18:06):
is sticky. That's something Jerome Powell, the Chair of the
Federal Reserve, acknowledged at February's FED meeting.
Speaker 2 (18:13):
The grocery bill is about past inflation.
Speaker 3 (18:16):
Really, consumers are still hurting.
Speaker 4 (18:19):
And they're not wrong to be unhappy that prices went
up quite a bit and they're paying a lot for
those things and commodities.
Speaker 3 (18:25):
Reporter Michael Hertzer says that's because if commodity prices can
be highly reactive, the prices consumers pay are.
Speaker 2 (18:33):
Not from the star level. It's hard to raise prices,
you know. If you get an opportunity when everyone is
talking about inflation and you raise prices, you don't really
want to give that back. So for the consumer, you
just got to, I guess, clip the coupons and try
to find savings.
Speaker 3 (18:52):
Or you can get creative, like Peter Longo the coffee roaster.
Speaker 5 (18:56):
My go to breakfast sandwich is the egg McMuffin. But
I noticed it got very, very expensive, and I was
just talking with the girl behind the counter and she said,
you gotta buy the sausage McMuffin and throw the sausage
away because they had one of those deals, so you
(19:16):
could get two sausage mcmuffins for two bucks.
Speaker 3 (19:21):
I guess there's always a deal to be found somewhere.
This is The Big Take from Bloomberg News. I'm Sarah Holder.
This episode was produced by Julia Press. It was edited
by Tracy Samuelson, Millie Munci, and Isis al Naida. It
was fact checked by Audre Natapia and mixed and sound
designed by Alex Sugia. Our senior producer is Naomi Shadan.
(19:44):
Our senior editor is Elizabeth Ponso. Our deputy executive producer
is Julia Weaver. Our executive producer is Nicole Beamsterboorg Sage
Bauman is Bloomberg's head of Podcasts. If you liked this episode,
make sure to subscribe and review The Big Take wherever
you listen to podcasts. It helps people find the show.
Thanks for listening. We'll be back next week.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
Hi, good Herdon.
Speaker 3 (00:11):
For the last few years, whenever I've needed a little
extra morning sustenance, I visited a food cart outside the
Bloomberg office. Could I have a egg and cheese sandwich,
extra cutup, salt and pepper, please.
Speaker 4 (00:24):
Egg and cheese ease a five dollar?
Speaker 3 (00:28):
It used to be three fifty.
Speaker 4 (00:30):
Or they actually says thanksy.
Speaker 3 (00:33):
It must have been a while since I stopped by
the cart, because Karen Hidalgo and her coworker Francisco told
me two months ago they had to raise prices. Their
egg and cheese sandwich on a roll went from three
point fifty to five dollars, and their bacon, egg and
cheese has reached six dollars. Add in the cost of
a cup of coffee and a tip, and my once
(00:54):
reliably cheap breakfast just ran me seven bucks. It's not
just my beloved breakfast cart. Bloomberg actually tracks the price
of the key ingredients in a bacon, egg and cheese
plus a cup of coffee on a special bacon, egg
and cheese index. It's updated every month using data from
the Bureau of Labor Statistics or the BLS, and this year,
(01:19):
the index has reached record highs.
Speaker 1 (01:21):
Our breakfast foods are very consistent consumer staples, and so
they sort of become outsize indicators of inflation.
Speaker 3 (01:30):
Aileena Pang covers agriculture and commodities for Bloomberg.
Speaker 1 (01:34):
Even though economists really like to look at the rate
of inflation, as a consumer, you tend to think, oh,
my coffee costs this much today, and my coffee used
to cost that much five years ago.
Speaker 3 (01:45):
In March twenty nineteen, the commodities that make up an
average BC plus a coffee cost almost a dollar ninety.
If you adjusted for inflation, that means the meal should
cost nearly two forty today, but as of March twenty
twenty five, it three dollars three twenty three to be exact.
So the story of why these foods have gotten so
(02:06):
expensive isn't just about inflation. It's also about supply and demand.
Speaker 5 (02:12):
When my customers complained to me recently at the price
of gouging, you're gouging.
Speaker 3 (02:17):
Global weather patterns and.
Speaker 6 (02:19):
Disease, experienced veterans would tell me, like, young man, we've
seen everything that could possibly happen in the egg marketing.
Speaker 3 (02:26):
Land wars, and trade wars.
Speaker 4 (02:28):
We're used to handling the natural barriers. The man made ones,
we kind of struggle.
Speaker 3 (02:32):
With them, you know, the winds of consumers and the
complexities of financial markets. Now, as Trump's sweeping tariff orders
send shockwaves through the global economy and put new pressures
on domestic commodities markets, we wanted to look closer at
one sandwich that helps explain it all. Today on the show,
(02:55):
we talk to people up and down the bacon, egg
and cheese supply chain, from a Kentucky week farmer to
a VP at an egg brokerage, to a coffee roaster
in Lower Manhattan, and along the way. Bloomberg's expert commodities
reporters helped us make sense of how this sandwich got
so expensive and what it says about the American economy, tariffs, inflation,
(03:16):
and more. This is the big take from Bloomberg News.
I'm Sarah Holder. If you had to pick one ingredient
to blame for the rising costs of a breakfast sandwich,
it'd probably be eggs.
Speaker 6 (03:35):
Eggs have a weird pulse on the economy.
Speaker 3 (03:39):
Brian Muskajeri has worked in the egg industry for over
a decade. He's currently a vice president at an egg
brokerage called Eggs Unlimited. It also helps farms distribute their
eggs to retail customers.
Speaker 6 (03:51):
When I got into the egg industry, my mom said, like,
somehow you belonged in this industry. You just always loved eggs.
Speaker 3 (03:57):
Right now is a rough time to be an egg lover,
as anyone who's been to the grocery store recently knows,
the price of eggs has been uncomfortably high. The most
recent data we have shows that consumer prices in March
hit a new record over six twenty a dozen, double
what eggs cost a year ago. Most people know, or
(04:19):
think they know, what's behind that high price, bird flu.
Since late last year, a new wave of avian influenza
has been tearing through American egg farms, killing off tons
of egg laying hence.
Speaker 6 (04:32):
Fifty million of three hundred and twelve million, you know,
since the start of October. It's just an unprecedented supply
loss than those prices have been passed along to the consumer, But.
Speaker 3 (04:42):
There may have been other dynamics pushing up the price
of eggs. The Department of Justice has opened a probe
to investigate potential price fixing by egg sellers and consumer
reactions also had an impact.
Speaker 6 (04:54):
It created panic buying and hoarding, and the consumers are
maybe buying more eggs than they typically bought, which just
kind of fed into the show rang a little bit more.
Speaker 3 (05:01):
But consumers have hit their price ceiling since February, They've
stopped buying as many eggs, and wholesale prices have started
to fall. Consumers just haven't felt that yet. The second
most important part of the bacon, egg and cheese, in
my opinion, is the bread. Bread has also outpaced inflation
(05:23):
since twenty nineteen. And to make bread, you need wheat.
Speaker 4 (05:27):
If you're flying around the country in the winter and
you say something beautiful and green amidst all the brown
and gray, that's a wheak field.
Speaker 3 (05:37):
That's Pat Clements, a second generation wheat grower and president
of the National Association of Wheat Growers. When America's beautiful,
green wheat fields are thriving, that doesn't always mean America's
wheat farmers are making more money. Walk me through how
you set prices.
Speaker 4 (05:54):
The issue is we don't set them, we take them.
Market prices for wheat can vary pretty widely over the
course of a year, and.
Speaker 3 (06:01):
From year to year, US wheat prices are heavily influenced
by two dominant global suppliers, Russia and Ukraine. When those
countries are cranking out wheat, the prices US farmers get
are lower When Russia and Ukraine's supplies strained, growers here
can make more so. Back in twenty twenty two, just
after Russia's ground invasion of Ukraine, prices shot up.
Speaker 4 (06:25):
That was one of the last big run ups in
the price of wheat.
Speaker 3 (06:30):
In January twenty twenty two, wheat was trading at about
seven to fifty a bushel. In March, after Russia's invasion,
it spiked, surpassing thirteen dollars a bushel, but it was
a short lived jump. Russia and Ukraine found ways to
keep supplies flowing, and that, combined with reduced demand in
the US, has driven down the prices wheat farmers are
(06:51):
getting for their product. A bushel of wheat is now
trading at around five forty.
Speaker 4 (06:56):
In the meantime, our input costs have risen back oh
Watch day twenty five to fifty, depending on which particular
item you're talking about.
Speaker 3 (07:06):
Pat says the costs of pesticides, fertilizers labor and equipment.
They're all up, and farmers fear that squeeze could get
even worse depending on how Trump's trade war goes.
Speaker 2 (07:18):
That's the sort of million dollar question.
Speaker 3 (07:20):
Michael Hertzer covers commodities for Bloomberg.
Speaker 2 (07:23):
Prices could change pretty dramatically depending on how all these
tariff negotiations go.
Speaker 3 (07:28):
Almost half of US wheat is exported. Mexico is our
biggest wheat buyer, and right now the country has escaped
the worst of Trump's tariffs. But if that changes, and
if Mexico retaliates, that could hit US wheat producers hard.
Speaker 4 (07:44):
To interrupt the supply to a dependable nearby neighbor, you
just can't imagine anything worse for the industry.
Speaker 3 (07:52):
From the ground in Kentucky, Pat says farmers are nervous
that the trade wars could drive business away.
Speaker 4 (07:58):
When you interrupt these small markets, someone is waiting to
take our place, perhaps some South American country we'll ship
into Mexico. Perhaps it'll be Russia, Perhaps you know, can
come from anywhere in the world.
Speaker 3 (08:12):
Tariffs could also drive up other costs of doing business,
not just for wheat farmers, but all the way up
the bread supply chain. That's on top of costs that
have already been rising and driving up the cost of bread,
labor costs, packaging, transportation, marketing.
Speaker 4 (08:28):
A loaf of bread that costs four dollars and a half.
The farmer's share of that it's fourteen cents. Our part
isn't moving the need.
Speaker 3 (08:39):
So we've covered eggs and bread. What about cheese? For
that we had to call one of our experts.
Speaker 1 (08:46):
We typically watch Class three milk futures. That's like the
class of milk that typically goes into cheese.
Speaker 3 (08:51):
That's Bloomberg's I lean up. Hang again. She follows the
cheese market, and she says prices have been relatively stable
in recent years. That's despite a cheese craze that started
during the pandemic, and.
Speaker 1 (09:03):
That trend has just sort of accelerated, and it's really
been a boon to the broader US dairy industry, just
because fluid milk is no longer as popular as it
once was at its peak, and so now what the
dairy industry likes to say is that people are eating
their milk instead of drinking it.
Speaker 3 (09:21):
Since the increased demand for cheese has been offset by
increased production, the cost of this domestic dairy product has
remained relatively low. But we also get some of our
fanciest cheeses from the European Union.
Speaker 1 (09:35):
They make a lot of the high grade specialty cheeses
that everyone loves.
Speaker 3 (09:39):
I'm not sure most of us order breakfast sandwiches with
imported French bree, but if you are, watch out. The
European Union is subject to the US as ten percent
tariff on imports. A more traditional pick might be American
cheese produced right here in the US, but the US
also exports a lot of cheese products. More than half
(10:00):
of US dairy exports go to Mexico, Canada, and China.
Canada has already put retaliatory tariffs of twenty five percent
on American cheese, butter, and dairy spreads, while China's levied
one hundred and twenty five percent duties on all US imports,
which would include dairy products. What if Mexico were to follow.
Speaker 1 (10:21):
Mexico is by far the biggest buyer of American dairy products,
and so there is concern there that if Mexico were
to retaliate by putting tariffs on US cheese, then that
would take away a market for US farmers.
Speaker 3 (10:34):
Overall, though, Aileena sees domestic cheese prices staying pretty calm
amid broader tariff turbulence. So we've tackled eggs, bread, and cheese.
But what's going on with the last two pieces of
this breakfast puzzle bacon and coffee? That's coming up. We've
(11:03):
been digging into why a classic American breakfast combo, the bacon,
egg and cheese sandwich plus a cup of coffee, is
getting more expensive in the US, and how those prices
could fluctuate further under Trump's trade war. We've covered the bun,
the e, and the c. Now let's bring home the bacon.
(11:24):
Bloomberg Commodities reporter Michael Hertzer told me that understanding bacon
prices actually starts with beef.
Speaker 2 (11:31):
The US beef cattle herd is the lowest since the
nineteen fifties, so beef is in pretty tight supply, and
one of bacon's keys to popularity has ben. It's always
been something of alternative to beef.
Speaker 3 (11:45):
In the past few decades, bacon has been heavily marketed
by restaurants and food companies who wanted to sub in
pork because beef was so pricey, and all that exposure
has helped bacon evolve from strictly a breakfast side to
something you see on salads, on burgers, any meal of
the day. All this drives up demand, but.
Speaker 2 (12:05):
Supply bacon is cut from the pork belly and there's
a sort of a finite amount of it. Each pig
only has one belly in Because it's so popular, bacon
has a sort of built in demand base, so.
Speaker 3 (12:18):
US consumers have spent decades driving up the cost of
bacon by buying more. Today it costs almost seven dollars
a pound, but Trump's policies could change that.
Speaker 2 (12:29):
A lot of the folks working inside the meat plants
are immigrants, and any sort of deportation efforts could have
a tangible impact on just the number of workers that
are available or the number of workers that are willing
to show up if they're in fear of being taken away.
Speaker 3 (12:47):
And once again, tariffs could upend everything.
Speaker 2 (12:50):
Mexico is the top buyer of US pork, and them
not having a tariff will allow US pork to continue
to go to Mexico. If that changes, theoretically, pork could
become cheaper in the US if Mexico is buying less.
Speaker 3 (13:06):
In the short term. Pork prices could drop if the
supply of pork exceeds the demand, but Michael thinks farmers
would adapt raise fewer pigs, bringing the price back up
in the medium term. So we're down to the last
ingredient in our breakfast. Order something to wash it all down.
I'll go Burista's Choice coffee.
Speaker 5 (13:30):
These increases over the last six months have been monumental,
and they've been fast.
Speaker 3 (13:36):
That's Peter Longo, the owner of Porto Rico Importing Company,
a coffee shop and roaster in New York's Greenwich Village.
The store has been around since nineteen oh seven, and
Peter took it over from his parents in the seventies.
And how much was a cup of coffee at that time?
Speaker 5 (13:52):
Oh man, a cup of coffee? What's a dime? Maybe?
Speaker 3 (13:55):
Yeah, coffee hasn't cost a dime in deck gates. But
in the past year coffee prices have truly been on
a tear. Today a pound of beans costs Peter about
four dollars. That's nearly double what he was paying last year.
Speaker 5 (14:12):
Things that are causing price increase is scarcity, fears of
weather changing, of the temperature. Global warming has affected farming
a lot.
Speaker 3 (14:25):
A drought in Brazil damaged bean supply in the world's
top producing country.
Speaker 5 (14:30):
But I think the speculative investment has boosted the price
of coffee and made it more volatile.
Speaker 3 (14:42):
Speculative investment, in other words, economic forces beyond supply and demand.
To understand how markets influence coffee prices, we had to
call back Eileena Pang, the agriculture reporter we heard from earlier.
She told me there are two groups of people who
get involve in coffee markets. There are commercial traders.
Speaker 1 (15:03):
People who have a steak in the market, so like
you're a coffee roaster, you're a coffee producer, you are
a coffee trading house. And then there are speculative traders,
like the hedge funds, and their goal is not to
take delivery of beans. Instead, they want to play the
coffee market kind of like the stock market, buying futures
at a certain price, hoping that they'll be able to
(15:24):
sell them for more than they bought. The thing is
that right now, the roasters, the coffee houses, the people
who do want to actually buy coffee and actually take
delivery of it, they've been cautious, trying to buy just
what they absolutely need and nothing more, hoping prices will
come down. The traders aren't willing to keep a bunch
(15:45):
of coffee on hand unless they know they have a
roaster to sell it to, and companies like Starbucks and
big roasters, who would normally buy a lot in advance,
are kind of reluctant to do that.
Speaker 3 (15:57):
And since there are fewer buyers in the market right now,
any activity can make prices fluctuate wildly. Tariffs are making
the coffee market even more volatile. Last week, the US
hit the world's second biggest grower, Vietnam, with levies of
forty six percent. This week, Trump announced who his pausing
that tariff at least for ninety days, but his universal
(16:19):
ten percent tariff still applies.
Speaker 1 (16:21):
Importers are already trying to get clauses into their contracts
so that those costs get passed on to coffee roasters,
and eventually there is a sense that that would make
it to the consumer level.
Speaker 3 (16:34):
Traders are now expecting bean prices to get even higher,
so high that consumers might eventually start buying less coffee,
which could force prices down. All this weighs on coffee
sellers like Peter, who's now selling a pound of beans
for sixteen to ninety nine, up a whole dollar since September.
Speaker 5 (16:54):
There's only a finite point to which you can raise
your prices before to fix your sales.
Speaker 3 (17:02):
After all these conversations about all these different commodities, you
might be noticing some trends we did. Bacon, cheese, and
bread prices are either stable or slightly elevated, but coffee
and eggs prices are up a lot. Those two ingredients
have been driving a lot of the increases in Bloomberg's bacon, egg,
(17:22):
and cheese index, and even though market and wholesale prices
were expected to decline for those commodities, the relief hasn't
hit consumers, and now tariffs have created a whole new
level of uncertainty about where these prices are headed next.
Speaker 1 (17:38):
The bacon, egg, and cheese index we have is a
little bit backwards looking.
Speaker 3 (17:43):
Remember the index is based on data from the Bureau
of Labor Statistics. It's not a snapshot of where prices
are today or tomorrow, but where they were last month.
That's the way US inflation data works too, and why
it can sometimes feel like the fed's latest CPI figures
don't perfectly reflect Americans' experiences of the economy, and inflation
(18:06):
is sticky. That's something Jerome Powell, the Chair of the
Federal Reserve, acknowledged at February's FED meeting.
Speaker 2 (18:13):
The grocery bill is about past inflation.
Speaker 3 (18:16):
Really, consumers are still hurting.
Speaker 4 (18:19):
And they're not wrong to be unhappy that prices went
up quite a bit and they're paying a lot for
those things and commodities.
Speaker 3 (18:25):
Reporter Michael Hertzer says that's because if commodity prices can
be highly reactive, the prices consumers pay are.
Speaker 2 (18:33):
Not from the star level. It's hard to raise prices,
you know. If you get an opportunity when everyone is
talking about inflation and you raise prices, you don't really
want to give that back. So for the consumer, you
just got to, I guess, clip the coupons and try
to find savings.
Speaker 3 (18:52):
Or you can get creative, like Peter Longo the coffee roaster.
Speaker 5 (18:56):
My go to breakfast sandwich is the egg McMuffin. But
I noticed it got very, very expensive, and I was
just talking with the girl behind the counter and she said,
you gotta buy the sausage McMuffin and throw the sausage
away because they had one of those deals, so you
(19:16):
could get two sausage mcmuffins for two bucks.
Speaker 3 (19:21):
I guess there's always a deal to be found somewhere.
This is The Big Take from Bloomberg News. I'm Sarah Holder.
This episode was produced by Julia Press. It was edited
by Tracy Samuelson, Millie Munci, and Isis al Naida. It
was fact checked by Audre Natapia and mixed and sound
designed by Alex Sugia. Our senior producer is Naomi Shadan.
(19:44):
Our senior editor is Elizabeth Ponso. Our deputy executive producer
is Julia Weaver. Our executive producer is Nicole Beamsterboorg Sage
Bauman is Bloomberg's head of Podcasts. If you liked this episode,
make sure to subscribe and review The Big Take wherever
you listen to podcasts. It helps people find the show.
Thanks for listening. We'll be back next week.
Hosts And Creators
Sarah Holder
Saleha Mohsin
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