2023-11-22 15:07:46 ET
The cost of an average Thanksgiving meal will probably not be able to keep up with general inflation in the future even if there would be periods where it does increase for a while, Deutsche Bank's Jim Reid said on Wednesday.
Recent data from a U.S. agricultural organization and lobbying group showed that an average cost for a Thanksgiving dinner this year is down 4.5% from last year.
As per the American Farm Bureau Federation’s 38th annual Thanksgiving dinner survey published last week , the average cost for a meal for 10 Americans was $61.17 in 2023 versus a record high average of $64.05 in 2022. Compared to 2019's average before the COVID-19 pandemic, the cost was up 25%.
The Y/Y decrease in the average cost was driven by a decline in the average price of the Thanksgiving dinner's centerpiece - the 16 pound turkey - which fell to $27.35, or $1.71 per pound (-5.6% Y/Y).
The 25% increase in the average cost of a Thanksgiving dinner from 2019 was slightly faster than the +20% inflation seen in that same period, Deutsche Bank's Reid said in a note.
"This is a good opportunity to remind everyone that over the very long run, agricultural prices have tended to decline in real terms," the research strategist said.
"We have a broader food price index back to 1947 (which) shows a similar consistent decline in real terms. Since 1947 this index has fallen -1.6% per annum in real terms," Reid added.
See the following chart for a look at that index:
"Clearly there are periods of strong outperformance, with the 1970s being the prime example, but over the long term they struggle to compete. For most commodities, humans tend to produce 'more with less' over time and these productivity gains are especially prevalent in soft commodities," Reid said.
"So rest assured that if history is to be believed, the cost of your Thanksgiving meal will probably fail to keep up with general inflation for the rest of your lives, even if there are periods where the cost does increase for a while," he added.
Some exchange traded funds (ETFs) that track agricultural commodities include: Invesco DB Agriculture Fund ETF ( DBA ) (the world's largest agri ETF), Teucrium Agricultural Fund ETF ( TAGS ), Teucrium Aila Long-Short Agriculture Strategy ETF ( OAIA ), Teucrium Agricultural Strategy No K-1 ETF ( TILL ), Global X AgTech & Food Innovation ETF ( KROP ).
See live data on how commodities are doing across the curve at the Seeking Alpha bond page.
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Your children's Thanksgiving dinner will be cheaper, according to Deutsche Bank