Red meat prices in the U.S. are at record highs, reflecting historically tight supplies of beef and pork.
Strong demand, both domestically and internationally, is butting up against cattle numbers impacted by three years of drought in cattle country and a hog industry hit hard by porcine epidemic diarrhea virus.
In the meantime, producers are seeing record-high prices for fed cattle and market hogs.
The result is a 9.4 percent increase in meat prices over year-ago levels. Beef and veal prices in May were up 10.7 percent over May 2013, and pork prices were up 12.2 percent, according to the U.S. Labor Bureau.
“There’s just not much meat out there,” said Ron Plain, ag economist with the University of Missouri. “Less meat brings you higher prices.”
Choice beef in grocery stores averaged $5.91 a pound in May, and pork averaged $4.10, an increase of 68 cents and 55 cents per pound, respectively, from a year ago, according to USDA’s Economic Research Service.
Beef prices have consecutively set record highs month after month from February through May, and pork has done the same from March through May, Plain said.
U.S. beef supplies are expected to be down 5 percent this year, and pork supplies are expected to be down 3 percent. U.S. beef exports were up 7 percent in the first four months of the year, and pork exports were up 10 percent, he said.
Demand and the price consumers are willing to pay is holding up fairly well, he said.
Oklahoma State University’s monthly online food demand survey showed consumers were willing to pay $7.52 per pound for steak in June, compared with $6.35 in May and $6.88 in June 2013. It also showed they were willing to pay $4.14 per pound for pork chops, compared with $3.51 in May and $3.63 in June 2013.
Both beef and pork set record prices last year at an average of $5.29 per pound for beef and $3.64 for pork. Prices this year will top that at $5.75 to $5.80 for beef and $3.85 or so for pork, Plain said.
Historically, meat prices haven’t kept up with general inflation, but the past couple of years have been highly unusual, with beef and pork prices outpacing inflation since 2008, said Bill Hahn, an economist with USDA-ERS.
There have been impressive run-ups in beef and pork prices and, while poultry prices have been more stable, high prices encourage consumers to shift to cheaper alternatives so all prices tend to move higher, he said.
Economists have been somewhat surprised by the strength of wholesale and retail meat prices, but beef and pork demand remains strong and supplies are limited, said Derrell Peel, livestock marketing specialist at Oklahoma State University.
The meat sector is in uncharted waters, and the wholesale price increases aren’t even yet fully reflected in the retail market, he said.
The pressure will continue on wholesale and retail meat prices, and there’s no indication demand will change, he said.
Stellar prices are also showing up in cattle and hog sectors. Cattle feedlot profits were $280 per head last week and packer profits were $81 per head. Cow/calf producers are on target for profits of $480 per cow this year, almost twice their profits in 2013, according to John Nalivka, president of Sterling Marketing.
Average margins for farrow-to-finish hog operation topped $101 per head, though pork packers were losing an average of 18 cents per head last week, he reported.
Cattle prices are at record highs, with slaughter steers selling for $150 per hundredweight, 750-pound steers selling into feedlots at $200 per hundredweight and 500-pound calves selling at around $250 per hundredweight, Plain said.
On a carcass basis, cash hogs traded around $125 per hundredweight last week, and live finished hogs sold in the high $80s per hundredweight.
Producers made the highest profits ever in March through May at $92 per head in March, $82 per head in April and $74 per head in May, he said.