Although food companies are claiming higher commodity prices as the reason for raising prices of their products, commodity prices are actually coming down, according to a review by Forex Trading, of which "Globes" has obtained a copy.
Sugar: The price of sugar has fallen 16% since January, and by 41% over the past two years.
Coffee: Food companies are raising prices for their coffee products, even though the price of coffee in commodity markets has fallen 29% since January.
Wheat and soy beans: Although prices for wheat and soy beans, two of the most important commodity prices in the market, have risen sharply, Forex Trading says that the announcement by Osem Investments Ltd. (TASE: OSEM), for example, which blames its price hike on higher prices for wheat, corn, soy beans and oil, is selective. "What about other commodities?" asks Forex Trading. "Why are we seeing price hikes for breakfast cereals and coffee by Osem, and price hikes for other products by Strauss Group Ltd. (TASE:STRS) and Tnuva Food Industries Ltd.?"
Forex Trading also dismissed the companies' claims about higher electricity rates and arnona (local property tax). "These increases are insignificant when the two factors that most affect industry are examined. The first, of course, is the price of oil, which has fallen 19% since the beginning of the year, lowering logistics and machinery operating costs, and indirectly lowering the cost of plastic packing as well.
"The second is the shekel, which despite rising against the dollar to $4 during the year, is now strengthening and just 1.8% above its level at the beginning of the year. The strong shekel helps companies like Osem, which has to import commodities, and lowers the price in shekels of the goods that it buys in dollars."
Published by Globes [online], Israel business news - www.globes-online.com - on October 25, 2012
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