September 9, 2013

US 65% lean beef trimmings price hit record high

The price of the US 65% lean beef trimmings, quoted by the USDA, hit an all-time high on Thursday (Aug 29).

According to USDA data, about 462,250 pounds of fresh 65% lean trimmings, which is blended with 35% fat to reach 100% consistency, hit an average price of US$147.86 per hundredweight (cwt). That price surpassed the previous record of US$145.67 on December 6, 2011.

The government said the overall country's supply of beef trimmings was lower amid light demand.

The 65% lean trimmings market typically is not a "big" traded item, said Livestock Marketing Information Centre director Jim Robb. The 50% and 90% trimmings are what drive the market and those prices are not at record highs, he said.

John Ginzel, analyst with Linn Group said that more than one day is needed to validate whether that price is just a few loads changing hands between a few people in the industry or signs of an active broader trend underway.

Ground beef costs at wholesale typically come down after the US September 2 Labour Day holiday, which is the unofficial end of the summer grilling season. However, possibly due to better hamburger demand, prices for ground beef have not declined as much as some had expected, said Ginzel. Tighter cattle supplies may have also influenced demand, he said.

Due to last summer's historic drought in the Midwest, and prolonged dryness in the US southwest, which hurt crops, drove feed costs to record highs, reducing the US cattle herd to its smallest in 61 years.