CHICAGO, Jan 9 (Reuters) - The price of choice-grade U.S. beef at wholesale set a new record on Thursday as already tight supplies were further squeezed by harsh weather that reduced the number of cattle that came to market in parts of the country, analysts said.
Select beef cuts on Thursday also marked a fresh record high for a fifth straight day.
Choice beef typically has more “marbling” or fat, making it juicier and more tender than select-graded beef.
The day’s wholesale price, or cutout, for choice beef hit $212.05 per hundredweight (cwt), eclipsing the previous May, 2013 record of $211.37, according to the U.S. Department of Agriculture.
USDA pegged prices for select wholesale beef at $209.05 per cwt, almost $2.00 higher than Wednesday’s record.
“Tight beef supplies is the underlying principal factor,” said University of Missouri livestock economist Ron Plain.
Packers hiked the price of beef it sells to grocers and restaurateurs after last week paying up to $138 per cwt for slaughter-ready cattle in the U.S. Plains - also a record high, he said.
The U.S. 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 Inc 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.
Retail beef prices in November climbed to $5.41 per lb, topping the $5.36 October record, according to monthly data compiled by USDA that will be updated on Jan. 16.
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.
“I thought it made about $2 per cwt difference. The real story is we’re not going to have as much beef this year as we had last year,” said Meyer.