January 13, 2014

US beef prices hit record highs on cold weather 

Due to cold weather that reduced the number of cattle coming to market in parts of the country, the price of choice-grade US beef at wholesale has set a new record.

The wholesale price, or cutout, for choice beef hit US$212.05 per hundredweight (cwt), eclipsing the record of US$211.37 last May, according to the USDA.

Retail beef prices in November climbed to US$5.41 per pound, topping the US$5.36 October record, according to monthly data compiled by USDA that will be updated on January 16.

The US herd, at a 61-year low after years of drought, forced processors to spend more for supplies. Additionally, ice and snow-packed roads snarled transportation of cattle to packing plants.

Accompanying temperatures at historic lows slowed down cattle weight gains, making them less available to major meat processors such as Cargill and Tyson Foods.

"The weights have been coming down and we started placing fewer cattle in feedlots last summer, so eventually we had to tighten supplies up," said Steve Meyer, president of Iowa-based Paragon Economics.

Economists said record-high beef cutout values should come as no surprise given the scare supply situation that could keep retail beef prices at or near record highs through 2014.

Analysts and economists said recent changes in the way USDA calculates the wholesale price for specific cuts of beef likely helped drive up the overall cutout value.