Commodity Inflation Moves Higher While FDA Advances Food Policy Agenda

Equity Research USA | Food August 15, 2026

Commodity Inflation Moves Higher While FDA Advances Food Policy Agenda Input cost inflation expectations moved higher this week, with our latest commodity tracker pointing to greater pressure into '27. Consumer demand signals remained mixed, as food retail traffic improved while QSR trends softened modestly into summer. Meanwhile, the FDA advanced efforts around GRAS disclosures and a federal UPF definition, highlighting the increasing regulatory focus on food and nutrition policy. We also heard from NOMD, BGS, and MBRF.

Input costs grinding higher into 2027 as most tracked commodities tick up. Our JEF Commodity Index now points to ~4.0% y/y input cost inflation in 2H'26 and +1.9% in 2027, up ~100 bps and ~60 bps from July, as 58% of tracked commodities posted upward revisions in both periods, driven by energy, eggs, and grains. Cocoa and wheat led higher on tight supply and weather risk, with cocoa elevated on excess West African rains, a strengthening El Niño, and COCOBOD guiding Ghana output down at least 16%, and hard red wheat pressured by a US crop near a multi-decade low, Black Sea disruptions, and hotter weather across key growing regions. Beef, by contrast, is set to ease off highs into 2027 as the USDA's planned late-August reopening of Mexican live-cattle imports to loosen the supply squeeze.

FDA proposes mandatory notification to close GRAS ingredient loophole. Under the current GRAS framework, food manufacturers can bypass FDA premarket review and "self-affirm" that a new ingredient is safe based on their own expert panel's conclusion, without ever notifying the agency. On Aug. 10, the FDA proposed a rule that would shift this voluntary structure to a mandatory notification system, requiring companies to notify the agency and provide supporting information for new and already-marketed self-affirmed ingredients, a priority of RFK Jr. and the MAHA agenda. The information would be housed in public online inventories, though ingredients that previously received an FDA "no questions" letter would generally be exempt. However, food industry groups counter that the FDA's authority to compel transparency is limited and are pushing Congress to approve a national standard, suggesting the rulemaking could still face resistance.

FDA and USDA advance the first federal definition of ultra-processed foods. Also on Aug. 10, HHS said the FDA and USDA had submitted for final review the federal government's first proposed definition of UPFs, a step that traces back to the agencies' joint July 2025 Request for Information seeking input on what criteria should anchor a uniform standard. A single, federally recognized definition is intended to give agencies a consistent basis for future nutrition policy, research, and potential labeling or guidance, and HHS framed the effort as a key component of the MAHA agenda's focus on diet-related chronic disease. That said, this action is earlier-stage and less concrete, with the proposed definition remaining under final review and the text not yet released.

Scott Marks * | Equity Analyst |

Natasha Baker * | Equity Associate |

Richard Thompson * | Equity Associate |

Please see analyst certifications, important disclosure information, and information regarding the status of non-US analysts on pages 10 - 15 of this report. * Jefferies LLC / Jefferies Research Services, LLC

Food Equity Research August 15, 2026

JEF index pointing to +4.0% commodity costs in 2H'26, and +1.9% in 2027 JEF Commodity Index vs. U.S. Government Food at Home CPI and PPI Measures 25%

Jefferies Food & Energy Commodity (10)% Inflation Forecast 2H'26: +4.0% 2026: +1.8% (15)% 1H'27: +3.4% Index (12-month trailing) vs. Food @ Home CPI: ~70% R2 2H'27: +0.5% Index (current) vs. Food Manufacturing PPI: ~70% R2 2027: +1.9% (20)% Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14…