Just because there isn’t rampant inflation, doesn’t mean that rising prices, especially for food, can’t affect corporate bottom lines.  China’s falling trade surplus is due in part to rising import prices.  Higher commodity prices for things, like sugar, are closing this much vaunted gap.  While weather is clearly playing a role in higher global food prices, don’t forget that a shift toward biofuel consumption is also raising food prices.  These higher prices are also showing up domestically as the BPP shows a divergence with the CPI.  These higher prices can ultimately affect corporate bottom lines by reducing profit margins.  One company in particular, Sysco, the giant food distributor, is facing margin pressures.  In today’s screencast we look at the effect higher commodity prices can have on corporate profits.

Items mentioned in the above screencast:

China is having to pay up for its commodity imports.  (The Source)

China is running out of sugar.  (Money Game)

Don’t discount the effect of biofuels on food prices.  (Time)

A (billion) signs that CPI is about to start heading higher.  (Money Game)

Falling margins is the major risk to earnings at this point in the cycle.  (WSJ)

Higher food prices are already hurting Sysco.  (Jack H Barnes)

Daily price chart of Sysco (SYY).  (Finviz)

Update:  How worrisome are rising food prices?  (Pragmatic Capitalism)