Retail Meat Prices Rise Sixth Consecutive Month
By Bruce Blythe, Business Editor
| Friday, July 16, 2010
Retail prices for meat and eggs rose for the sixth consecutive month in June, reflecting the contraction of the nation’s livestock herds.
The Consumer Price Index for beef, pork, poultry, fish and eggs rose 1 percent in June from May, the U.S. Bureau of Labor Statistics said in a monthly report today. Retail prices in that category were up 2 percent from June 2009.
Beef and pork prices climbed this year as cattle and hog inventories shrunk, forcing meatpackers to bid more aggressively for smaller supplies of slaughter-ready animals. Livestock producers trimmed herds after taking heavy losses after corn soared to records above $7 a bushel two years ago.
The rise in retail meat prices may be troubling for beef and pork producers, analysts say. The U.S. economy’s recovery has sputtered in recent months and unemployment remains near a 27-year high, meaning many consumers may shun higher-priced foods such as chops and steaks.
Recent reports on consumer credit and retail sales were “very disappointing,” suggesting “a very frugal shopper heading into the third quarter,” said Mike Zuzolo, president of Global Commodity Analytics and Consulting LLC in Lafayette, Ind.
Demand for beef and pork is “likely to be more fragile” during the second half of 2010, Zuzolo said. If animal weights increase and red meat production rises, “I’m afraid it will be more of a buyer’s market,” he said.
In May, retail prices for “choice” grade boneless sirloin steak averaged about $6.14 a pound, up 1.3 percent from April and up 8.1 percent from December, according to Bureau of Labor Statistics data.
At the wholesale level, choice beef is up about 12 percent from a year ago, while pork is up 27 percent, according to USDA data.
Corn earlier this year fell to about half its 2008 peak, with closest-to-expiration futures in Chicago trading around $3.90 a bushel this morning.
But corn prices are still historically high and are expected to remain above $4 a bushel through 2011, based on Chicago futures.
Higher corn prices to a large extent stem from increasing demand from the country’s ethanol producers, livestock economist Steve Meyer said.
“From the time we started subsidizing ethanol, this is the result,” Meyer said in a phone interview today. “Lower (livestock) numbers are driven by higher costs and losses” for beef and pork producers, he said.
Higher corn prices “are going to get passed down to the consumer,” Meyer said. “Consumers have to pay all the costs in the long run.”
Food prices overall have changed little in recent months and retail inflation generally remains tame, government data showed.
For food consumed at home, consumer prices fell 0.1 percent in June from May, and rose 0.2 percent from a year earlier, according to today’s Bureau of Labor Statistics report.
Retail dairy products prices rose 0.1 percent in June compared with May and rose 1.9 percent from a year earlier.
Overall, the Consumer Price Index declined 0.1 percent in June on a seasonally-adjusted basis. Excluding food and energy prices, the CPI rose 0.2 percent.
Bacon prices increased 18 cents to $4.05 per pound setting its yearly high last month. Boneless ham moved 9 cents higher to $3.40, 12 cents above its yearly average. Boneless chops were dropped 3 cents to $3.87 per pound, but still remain 19 cents above their yearly average.
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