March 10, 2014

US fresh beef prices set record high in 27 years

The average price for a pound of fresh beef reached US$5.04 in January 2014, the highest on record in at least 27 years brought about by the dwindling supply, coupled with record beef exports in 2013, according to the USDA.

The lingering effects of drought in California, the Great Plains and Texas have led to the smallest US herd size in 60 years, said Austin Arndt, president of the Wisconsin Cattlemen's Association.

Holmen Locker and Meat Market owner Scott Stettler has seen wholesale beef costs jump US$0.60 a pound over the past few months.

Due to seasonal demand for roasting cuts, the price increase has been more dramatic for beef rounds, chuck and rumps. Other cuts, such as porterhouses, rib-eyes and strip loins, have held steady.

In order to keep products affordable for his customers, Stettler absorbs some of the price increase, but he has had to adjust in order to meet profit margins.

Meanwhile, it's a bull market for beef producers.

"It's great when you're selling," Viroqua cattle farmer Dan Jacobson said.

The price of feeder calves - young steers and heifers sent to feedlots to be fattened up before slaughter - has soared to about US$1.90 per pound, he said. Fed cattle prices are about US$1.50 per pound.

Jacobson has about 40 cows due to calve this year, his lowest number ever. With livestock producers across the nation taking advantage of the high sale prices for their cattle, herd numbers likely will remain low for the next few years, Jacobson said.