Meat prices rising
BY KYLE ARNOLD World Staff Writer
Friday, January 21, 2011
Rib eye or ground sausage, nary a cut of beef or pork has escaped rising prices.
Strong demand for cattle and hogs amid weak supply is driving up prices for popular types of meat, although other food prices have been nearly flat.
“Beef and pork prices are rising because of supply-and-demand factors,” said Ephraim Leibtag, a food economist with the U.S. Department of Agriculture. “We have a country and a world coming out of a recession.”
The supply problem has been exacerbated by high feed costs for ranchers and hog producers, creating tight profit margins.
Cattle and corn prices have been moving in the same direction, said Ryan Turner a risk-management consultant with FCStone Group Inc. in Kansas City, Mo.
There’s a “real strong correlation right now” between grain and livestock markets, Turner told Bloomberg News. “As corn goes higher, we need more for the end product because it’s costing us more to produce the animal.”
Retail meat prices have increased 7.2 percent in the last year, led by a 6.1 percent in the price of beef and an 11.2 percent increase for pork, according to the Consumer Price Index report for December by the Bureau of Labor Statistics.
“It has all gone up a little bit,” said Kristy Bruner, owner of Bruner’s Old Time Meat Market at 8013 S. Sheridan Road.
Hamburger meat has led the price increase, and there have been some shortages of high-end meats such as filet mignon, she said.
“I think people are looking more for bargains and struggling,” Bruner said.
But overall inflation, including food, has barely risen at all — just 1.5 percent in 2010, according to the CPI.
In fact, some foods such as cereal, bread and nonalcoholic beverages are actually falling in price.
The increase in meat prices has been more pronounced for certain cuts, especially high-end products. Short rib prices have risen to $3.41 a pound from $2.51 a year ago, a 35 percent increase, according to the National Cattlemen’s Association.
The national average for bacon is $2.40 a pound, up 13.4 percent from a year ago.
For cattle producers, the sudden price increase hasn’t translated into the profits some might expect.
“Feed prices are up, and fuel prices are going up, too,” said Scott Dewald, executive vice president of the Oklahoma Cattlemen’s Association. “The higher cattle prices have helped some, but it’s still not a profitable industry.”
The price of grain, corn and other feedstock has been increasing as the economy recovers, making it more expensive to raise cattle, which involves a two- to three-year process from birth to slaughter.
“There really isn’t any incentive for cattle producers to increase herds right now,” Dewald said.
Overall cattle supplies have been low for several years, but producers have been able to creatively mask some of the supply issues, said Derrell Peel, an extension livestock marketing specialist at Oklahoma State University.
He and other industry analysts don’t see any improvement on the way for consumers at the meat case.
“This is really just the beginning,” Peel said. “I think by the end of the year consumers will really start to see some of these issues on the retail level with higher prices.”
Friday on the Chicago Mercantile Exchange, cattle futures for April delivery rose 0.25 cents, or 0.2 percent, to settle at $1.1345 a pound. On Tuesday, the commodity reached a record $1.166 a pound, the highest since trading started 1964.
Hog futures for April settlement added 0.35 cent, or 0.4 percent, to settle at 86.75 cents a pound in Chicago. On Thursday, hog futures reached 87.5 cents, the highest since April 23.