As if consumers, already under stress from high unemployment and small wage gains, don’t have enough to worry about, beef prices are expected to soar to record highs this year.
Beef prices will probably spike 4 percent or 5 percent on top of a 10 percent increase last year, predicts the US Agriculture Department, notes USA Today.
A severe drought in cattle-producing states left ranchers with little grass and water for their cattle, forcing them to sell cattle to feedlots or slaughterhouses, according to the newspaper.
Plus, ranchers have been thinning their herds due to rising prices of corn used to feed herds, rising property costs, and more competition for land from soybeans, corn and other crops, says Kevin Good, an analyst with CattleFax, according to USA Today.
American ranchers have been sending more beef overseas where they can find better prices, leaving less on the table for American consumers. The Agriculture Department said U.S. beef exports jumped 22 percent last year, USA Today reports.
All those factors combined to increase beef prices to record levels even though Americans are eating less of the meat.
Although ranchers are making out well, packers and retailers are struggling to pass costs along to consumers, according to USA Today.
Overseas demand, especially in Japan and South Korea, will keep prices high even if Americans lose their appetite for beef, predicts Barron’s. The Japanese and South Koreans are falling in love with American beef, and exchange rates make it more affordable for them.
Beef orders from those countries jumped 33 percent in the first 11 months of 2011 from the same period in 2010, the Agriculture Department reported, according to Barron’s. Live-cattle futures reached a record high of $1.2595 a pound last Wednesday.
South Koreans turned to American beef – and found out they liked it – after their own cattle herds were decimated by a hoof-and-mouth disease outbreak in 2010, Barron’s said.
Japanese began favoring foreign-produced food after radiation was found in locally grown produce following the Fukushima nuclear-reactor meltdown.
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