CHICAGO, Ill. (Reuters) — Wholesale U.S. Choice-grade beef hit an all-time high May 14.
The soaring prices were spurred by supermarkets stocking up on tight supplies for the May 25 Memorial Day holiday, the kickoff of the summer grilling season, traders and analysts said.
In addition, retailers, processors and the food service sector are heavily promoting beef in May as the U.S. industry celebrates National Beef Month and National Hamburger Month.
Choice beef is typically more expensive than the next-lower grade, Select, because it includes more marbling or fat, which makes it more juicy and tender.
Wholesale price for Choice beef hit US$264.74 per hundredweight May 14, topping the previous record of $263.81 Jan. 14, according to the U.S. Department of Agriculture.
It also surpassed the July 2014 record of $263.66 set in the thick of summer barbecue season and outpaced last year’s price at this time by $39.30.
“There’s a little shot of demand out there for beef right now and a lot of it has to do with bookings for Memorial Day and Father’s Day,” said Troy Vetterkind, president of Vetterkind Cattle Brokerage in Chicago.
Don Close, an analyst with Rabobank, attributed increased demand to retailers who initially put off buying already pricey beef, only to be caught short of inventory when spring finally arrived in some parts of the United States.
Pent-up demand on the East Coast as residents emerged from a brutal winter further fueled demand for beef, he said.
“After all the record snow and bad weather they had, those people are ready to get outside and grill something.”
Surging beef prices come as American ranchers work to rebuild the cattle herd, which at 89.8 million head is the third-smallest since 1952 after several years of drought-devastated crops and pastures.
Packers processed 7.3 percent fewer cattle from January to the week ending May 9 than last year. This yielded five percent less beef, which was partly offset by heavier animals.
“We did not have supply, and the only way we could mitigate the shortage was to make (cattle) bigger,” said Close.