Sunday, May 26, 2013

Pricey Beef Puts Heat On U.S. Grilling Season

At the Wall Street Journal:

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As Americans prepare for Memorial Day—the official kickoff to a summer grilling season of burgers and T-bones—rising beef prices have some consumers balking in the grocery aisles.

Retail beef prices are widely expected to set new records in coming weeks after wholesale prices, or the amount meatpackers charge sellers for beef, hit an all-time peak this past week.

After achieving new highs for three weeks, choice-grade beef, the most common variety in the U.S., jumped to $2.1137 a pound Thursday, according to the U.S. Department of Agriculture. That level broke a decade-old record for wholesale prices set in 2003, when a case of mad-cow disease in Canada led to a spike in export demand for U.S. beef.

Wholesale prices retreated slightly Friday afternoon, falling to $2.0887 a pound, confirming some market-watchers' suspicions that retailers may be unwilling to swallow the record-high beef costs.

The fat beef prices are the result of years of drought in major cattle-producing states, a trend that has shrunk the nation's cattle herd to its smallest level in six decades.

Higher beef prices are pinching food budgets for consumers already wrestling with a rise in gasoline prices, the expiration of the federal payroll-tax holiday and stubbornly high unemployment. They're also expected to drive consumers to other meats after the holiday weekend, one of the biggest beef-sales periods of the year. That could threaten high beef profit margins for meatpackers like Tyson Foods Inc. TSN -0.20% and Cargill Inc. and also pose a challenge for restaurants and grocery stores.

"Consumers may favor beef more, but they've got to feed their families," said Gary Morrison, an analyst with Urner Barry's Yellow Sheet, a meat-industry newsletter in Bayville, N.J.
Well, my wife's working on Monday, otherwise we'd be having a huge tri-tip roast, damn the prices!