Tight supplies push beef, pork prices upward

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 feed 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, agricultural 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.