Meat Inflation Accelerates as Demand Grows for U.S. Beef, Pork

By Elizabeth Campbell, Mar 25, 2011

Meat prices are rising in the U.S. at a faster annual rate than forecast a month ago, as increased demand for pork and beef exports erode inventories and high feed costs discourage livestock producers from expanding herds.

The retail cost of meats will increase 4.5 percent to 5.5 percent this year, including a gain of as much a 7 percent for pork, the most of any major food group, the U.S. Department of Agriculture said today in a report. Beef prices will rise as much as 5.5 percent, or 1 percentage point more than the government forecast on Feb. 24.


“Demand just appears to be the driving force,” said Dennis Smith, a senior account executive at Archer Financial Services Inc. in Chicago. “Domestic and export demand are both improving rather dramatically.”

U.S. exporters shipped 17 percent more pork to overseas buyers in January compared with a year earlier, and beef sales were up 24 percent, according to the most-recent USDA data. As demand increases, cattle and hog producers have been reluctant to expand herds because the cost of corn, the primary livestock feed, has jumped 94 percent in the past year.

Meat prices are rising faster than overall food costs at supermarkets and restaurants, which the USDA said today will increase 3 percent to 4 percent, the fastest since a 5.8 percent jump in 2008 that was the most in 28 years.

Global food prices rallied 25 percent in 2010 and set a record in February, according to the United Nations. The higher prices contributed to riots in North Africa and the Middle East that toppled leaders in Egypt and Tunisia.

Meat Inflation

“As commodity prices and input costs have risen over the past nine months, beef and pork prices are now significantly higher than in 2010,” Ephraim Leibtag, a USDA economist, said in a note accompanying the report. “Increased inflation for beef and pork products is expected in the first half of 2011.”

Wholesale pork in the U.S. has climbed 28 percent in the past year and is the highest since August, while wholesale- choice beef jumped 14 percent, government data show.

Hog futures rose today to the highest price since at least April 1986 on the Chicago Mercantile Exchange, and cattle prices neared a record. The “outrageous” cost of corn is limiting gains in meat supply, Archer Financial’s Smith said.

“We are not really expanding red-meat production all that much, not like you would normally see when you have prices at such extremely high levels,” said Dan Vaught, the owner of Vaught Futures Insights in Altus, Arkansas. “A lot of that simply goes back to the cost of feed.”

Retail-beef prices rose 1.9 percent last month and are 11 percent above February 2010, according to today’s report. Pork rose 1 percent in February and is 8.9 percent above a year ago, the USDA said.

Dr. Pinna says:

If you are a vegetarian or a bird that is not a hawk or eagle, you will sneer at those who start complaining. “It’s God’s Punishment,” you will tell them, “for killing the Cows and Piggies. Eat some beans and carrots and forget meat.”

Of course, if you’re fond of Osso Buco or Veal Scaloppini, this type of comment wont carry much weight.

No one goes hunting anymore and starting a herd of cattle in a city will probably break every law written by every politician since Moses.

I suggest you get rid of that SUV or Van, buy a motor scooter and with the Geld that you save from buying less gas you can afford a dish of pasta with a nice Salsa Cacciatore. (Hunter’s Sauce. )

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