U.S. Beef Prices Sizzle Ahead of Barbecue Season

US - Prices for steaks, filets, and hamburger will be going up just as consumers begin firing up outdoor grills for spring cookouts due to a sharp increase in wholesale beef prices, food industry sources said.
calendar icon 12 April 2007
clock icon 2 minute read
Wholesale beef prices on Wednesday jumped to their highest level in nearly 3-1/2 years in reaction to demand from supermarkets for upcoming cookout promotions and to tight supplies of beef, the sources said.

"For the consumer it is going to mean higher beef prices," said Andrew Gottschalk, analyst with HedgersEdge.com, a livestock industry consulting firm.

The price increases will occur during the year's best sales time for beef.

"We are on the doorstep of the best demand period, which is from mid-April to the end of June," said Gottschalk.

It is during this period that sales of popular cookout meats increase as consumers greet the warm spring weather with picnics and family cookouts.

"Typically, between the first and second quarters, beef sales increase 10 to 15 percent," said Jim Robb, an economist with the Livestock Marketing Information Center.

The U.S. Agriculture Department said on Wednesday the average wholesale price for choice grade beef increased to $171.03 per 100 lbs. That is the highest since November 2003.

An increase in beef prices had been expected because a harsh winter and high grain prices caused a drop in beef and cattle production.

Prices for corn, a popular feed, reached a 10-year high earlier this year. As a result, to save on feed costs, cattle producers are fattening fewer cattle and selling the cattle they do have at lighter weights.

Beef companies such as Tyson Foods Inc., Cargill Meat Solutions, National Beef, and Swift & Co. may soon benefit from the higher beef prices, but for now these companies are losing money on beef sales because of there having to pay high prices for cattle.

"The higher (beef) prices are necessary because they have higher costs, but it doesn't mean that they are maintaining their gross margin," Ann Gilpin, a Morningstar food analyst, said of the meat companies.

Source: The Epoch Times Ireland
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