Chicago - Retail beef prices are near a five-year low, and that means consumers can get a lot more from their food dollar when shopping at their local supermarkets.
According to Chuck Lambert, chief economist for the National Cattlemen's Beef Association (NCBA), Americans will consume approximately 60.7 million pounds of beef on Labor Day alone, which is 20% more than the amount consumed on average days. High consumption expectations this Labor Day are based on a combination of factors, including low retail beef prices and high beef supplies in the marketplace.
According to the U.S. Department of Agriculture, prices for all retail beef (including Choice, Select and ungraded cuts) averaged $2.54 per pound during the first six months of 1998, compared to $2.71 per pound five years ago. Considering more than 70% of the total U.S. beef volume is sold at retail meat cases, supermarkets continually advertise special (or “featured”) beef prices to help move product through the supply channel. Retail featuring for beef is typically strongest during third quarter as retailers leverage consumers' love of beef and grilling.
The average featured beef price was $2.48 per pound in June and July. As for featured prices of specific cuts, retailers are offering great values on popular summer items such as ground beef, porterhouse/T-bone steaks and ribeye steaks. In July, the average featured price for lean and extra lean ground beef was $1.93 per pound, compared to an average retail price of $2.05 per pound. USDA Choice porterhouse steaks were featured at $4.55 per pound versus the average retail price of $5.98 per pound, and ribeye steaks were featured at $5.70 per pound, compared to the average retail cost of $6.18.
While beef prices have dropped in the past five years, prices for other food products have increased considerably. According to the U.S. Bureau of Labor Statistics, the price for one dozen Grade A eggs jumped more than 33% in recent years, up from $.87 per dozen in 1993 to $1.31 per dozen in 1996. The price of apples rose from $.78 per pound to $.89 per pound during the same time period. Prices for all-purpose flour, bread, and most other fruits and vegetables also have increased since the mid 1990s.
Today's favorable retail beef prices are due to larger than expected beef supplies. The USDA expects 1998 beef production to top more than 25 billion pounds, which continues a three-year trend of U.S. beef production levels over 25 billion pounds annually. While the normal 10-year production cycle would suggest a decline in beef production this year, several factors are contributing to this high supply time:
Drought conditions in major cattle producing areas such as Texas and other southwestern states are forcing many producers to put cattle to market sooner than they traditionally would.
Lower grain prices are resulting in heavier weights of fed cattle, which puts more beef tonnage in the marketplace.
The financial crisis in Asia has slowed U.S. beef and beef by-product exports to that region.
Beef consumption continues to outweigh that of any other competitive protein. The USDA estimates the 1998 per capita consumption of beef (on a boneless weight basis) will reach more than 64 pounds - its second highest level since 1989 - and will contribute to a nearly 4% increase of total red meat consumption from last year. Sixty-four pounds of boneless weight beef equals about 47 pounds of cooked beef per person per year - or 2.1 ounces of cooked beef per day. That easily falls within the USDA's recommended daily allowance of three to six ounces of protein foods each day.
Meat Industry Insights News Service
P.O. Box 553
Northport, NY 11768
Phone: 631-757-4010
Fax: 631-757-4060
E-mail: sflanagan@sprintmail.com
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