Spiraling beef prices causing sticker shock at Texas barbecue smokers

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http://www.star-telegram.com/2014/02/16/5574580/spiraling-beef-prices-causing.html

Spiraling beef prices causing sticker shock at Texas barbecue smokers
Posted Monday, Feb. 17, 2014
By Steve Campbell

Take a bite of beef and chew on a little supply and demand.

Cooked down by three years of punishing drought, the U.S. cattle herd has dwindled to its lowest level since the 1950s, and that ongoing shrinkage has driven the average price of beef to a record $5.04 a pound, according to a the U.S. Department of Agriculture.

That’s a 6 percent increase from a year ago and comes after a 5 percent hike in 2012, said Kevin Good, an analyst at Denver-based Cattle Fax, which tracks the beef industry.

The spiraling beef prices are causing sticker shock at barbecue smokers across Texas, said John Sanford, owner of BBQ on the Brazos in Cresson.

[2naSalit]

1. So stop eating that climate menace

[pipoman]

2. interesting menu

Doesn't seem to effect the price at the menu. My menu includes all of those options too. I have paid between $4 and $4.50 for trimmed brisket for the last year. I have been paying around $1.75 for pork butts. If that is true the meat cost on 1/3 lb of brisket is $1.50 and $.58 for pork. The price on the menu doesn't reflect that margin so apparently the owner is offsetting the beef with a marginal up charge and a higher return on the pork.

Here are some excerpts from my beef suppliers market report a few weeks ago.

diarrhea virus and the impact of  two years of drought bringing cattle numbers to the lowest count since 1962.

 

2014 is starting off with the markets going higher. An interesting way of looking at the protein market is this Cattle-Fax report comparison. In 2000, beef was 7% higher than pork and 78% higher than poultry, but by the end of 2013, beef was 35% higher than pork and 148% higher than chicken. The message this sends to our customers is pretty simple: even though beef is a much desired protein, operators had better produce a quality dining experience that makes it worth the price.

Snip

BEEF

Typically after the holiday season is not a time when markets make dramatic moves.  However, fed cattle prices set another record high last week and are now firmly in uncharted territory. The jump began due to a weather market, and has gained momentum as a short-bought industry looked to secure product ahead of the short term spike The average boxed beef cutout value jumped nearly $2/cwt.  and now resides at approximately $211/cwt. Last year’s highest point was only $202/cwt. It is time to have a conversation with your customers so they don’t get sticker shock. Following two consecutive exceptionally low holiday shortened kill weeks, cutout values have jumped sharply since the beginning of the year. This is particularly true for ground chuck and ground round prices, which recorded all time high levels today. The high on Friday’s USDA for ground chuck was a staggering $3.60/lb, $1/lb higher than the previous record high quote.

 

We are seeing outside cuts setting records as hot as the day is cold. Top rounds, flats, knuckles and clods leading the way by a wide margin, at levels up 25% from a year ago, which previously represented the highest pricing on record. There isn’t much to stop the upward momentum over the short term as the record prices are still driving sales as we are experiencing shortages on all these cuts. The good news is that what goes up must come down; and I expect February to be a complete retracement of early year gains setting us up again for record highs in April.

 

Middle meats are down since the holiday and will remain soft until February as there is not a lot of grilling going on this month with the record cold in much of the nation.. So where does this leave us? The ranchers and feeders have the upper hand and business is good. The packers are bleeding money at a loss between 60-100 dollars a head. The packer can cut back to 32 hours to try and recover their cost. If they continue to take a loss in the rounds and the chucks they will need raise price on middles. It’s a Mexican standoff. However, there is seemingly very little demand present that will support current price levels. Weather and reduced supply induced panic buying that pushed prices to record highs. Cattlemen that have cows will likely continue to be profitable, and if Mother Nature cooperates, this will lead to expansion of the U.S. cattle herd and longer term larger supplies and lower cattle prices. Come on 2015.

[Armstead]

3. Let those free market loving bastids enjoy the fruits of the free market