US meat prices to rise on high input costs

Due to surging feed costs linked to demands for more ethanol, US meat prices may rise to records this summer after farmers reduced hog and cattle herds to the smallest sizes in decades.

Wholesale pork went up as much as 25% this month to US$0.9068 a pound last week, the highest since August 2008, USDA data shows. Beef climbed 22% this year to US$1.6896 per pound on April 23, the most expensive since July 2008. Chicken's gain in March was the most in 20 months.

Demand for pork chops, steaks and chicken breasts is rising as the economy improves and China and Russia allow more US imports. Domestic supplies may drop to a 13-year low because of culls to stem losses caused by corn prices that doubled after former President George W. Bush set targets to increase ethanol use.

"Ethanol-induced prices in meat are just now getting to the marketplace," said Steve Meyer, the president of Paragon Economics, a meat-industry consultant in Des Moines, Iowa. "Consumers are going to see the highest prices they've ever paid in meat and poultry because of the decisions made to make corn into ethanol," he added.

''Retail prices may hit records in the next 90 days as demand peaks during summer grilling season,'' said John Nalivka, a former USDA economist and president of meat consultant Sterling Marketing in Vale, Ore.

More expensive pork and beef may revive food inflation that dropped last year for the first time since 1961. Meat prices tracked by the UN Food and Agriculture Organization are up 5% this year, even as food costs fell 5.8%.

In March, retail beef on average had little change from a year earlier, 4.8% below its record high, as per USDA data. Pork was 1% lower than the same month in 2009, while chicken was 9.6% below the record high set last year.