CHICAGO May 1U.S. beef prices jumped to a
10-year high on Wednesday as the arrival of warm, dry weather
over much of the country will have backyard chefs firing up
grills and throwing on steaks and hamburgers, analysts said.
Until this week, spring weather has been a mixture of cold,
snow, frost and rain, none of which is conducive for picnics or
backyard cookouts. But as temperatures rose across much of the
country this week, reaching the 80s Fahrenheit in Chicago,
analysts expect a seasonal surge in beef sales.
The wholesale price choice beef, or cutout, on Wednesday
jumped $3.10 to $199.49 per 100 lbs (cwt), the highest since
$200.65 on Oct 20, 2003, according to U.S. Department of
"We've not yet seen the big demand push we normally get by
this time of year because of weather issues. But the cutout
surge suggests a kick-start for grilling, Mother's Day features
and Memorial Day bookings," said Don Roose, analyst with U.S.
Commodities in Des Moines, Iowa.
Consumers already are paying record high prices for beef and
the latest surge in the wholesale market may push supermarket
prices even higher.
Despite temperature spikes this week that were more
reminiscent of summer than spring, snow and freezing rain
continue to cover parts of the Midwest, and more cold is
Temperatures in Amarillo, Texas, on Tuesday topped out at 97
degrees Fahrenheit (36 Celsius) with temperatures expected to
plunge into the low 30s F by Thursday morning, said David Hales,
president of Texas-based Hales Trading Co.
At supermarkets the average beef price in March was a record
$5.30 per lb, eclipsing the previous record of $5.15 set in
November, according to USDA's Economic Research Service.
Those higher beef costs and reduced consumer discretionary
spending may cause some consumers to switch from beef to other
competitively priced meats.
"We saw a lot of cheap pork and poultry in stores and we've
not seen very good beef features in a long time, which may
explain what's driving beef demand now," Hales said.
Analysts were divided about whether current beef demand will
be strong enough to hoist the cutout above the record of $201.18
on Oct 16, 2003, following an outbreak of mad cow disease in
Those predicting even more gains in wholesale beef prices
say beef production will likely go down as the U.S. cattle herd
is the smallest in 61 years. The herd was shrunk as severe
drought damaged pastures and drove up feed costs.
Agribusiness company Cargill Inc early last month
said pressure from the historic U.S. drought hurt its meat and
grain operations, knocking quarterly earnings down 42 percent.
Others believe wholesale beef values may have peaked,
arguing that cattle weigh more thus producing more meat for
"That second week of May is when we seasonally run out of
gas. We tend to see more numbers of cattle and they tend to put
on more weight because of better weather," said Roose.
"And meat demand tends to suffer a little in the heat of
summer when sometimes it's too hot to cook outdoors," he said.