Industry News – AM
Economist predicts record beef prices
By Rita Jane Gabbett on 4/27/2010
Beef prices could hit record highs this spring and summer, eclipsing the third quarter of 2008 when the average retail beef price hit a record $4.46 per pound, according to Purdue University Extension Economist Chris Hurt.
In his weekly outlook report, Hurt noted that retailers have reduced their margins to keep beef prices low so far this year. While retail beef prices were down 10 cents per pound in the first quarter, retail margins dropped by 20 cents per pound.
This can’t continue. Retailers will have to raise retail prices soon. And when they do, Hurt cautioned, “Given the weakly recovering economy, consumer demand may not appear so robust this summer with record high beef prices in grocery stores and restaurants.”
There are a number of factor pushing beef prices higher, said Hurt, including: the world economy continues to recover, feed prices are lower, red meat supplies are down, exports are strong and retail beef prices have been low.
In fact, U.S. beef production is down 1 percent so far this year as somewhat higher slaughter rates have been more than offset by lower cattle weights. In addition, U.S. and international consumers are competing for reduced meat supplies as they feel more confident about the global economy. In the first two months of 2010, U.S. beef exports were up 24 percent while beef imports were down 23 percent, resulting in a 5 percent reduction in U.S. per capital beef supplies.
Hurt predicted retail beef prices will remain strong throughout the year, but will peak this spring when supplies are the lowest.
Finished cattle prices are also expected to be at their yearly highs this spring. Summer prices are expected to be in the low-to-mid $90s per hundredweight. Hurt forecast in 2010 finished cattle prices may average about $93, dramatically above the $83 of 2009. Prospects for 2011 should remain strong as well, perhaps moving close to $95 for the year.
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