Kub’s Den: Meat Markets

This Memorial Day weekend, you couldn’t walk through any park or neighborhood without being greeted by that welcome summer smell of burgers and brats on a charcoal grill. Holiday-makers had an extra reason to enjoy those meat products this year: They are probably cheaper now than they will be at any point in the near future.

Corn prices have risen to two-and-a-half times their summer 2006 levels and the soybean meal price has doubled, leading to greater prosperity for grain and oilseed farmers; however, it’s not such welcome news to those who raise livestock. Pork Magazine published estimates pegging losses for farrow-to-finish operations at about $10.80 per animal ($4 per cwt) while a University of Nebraska study showed that without aggressive hedging, cattle feeders may be facing losses up to $90 per animal.

Usually in an environment like this, the finger of blame starts pointing at meat packers. As it happens, meat packers are taking advantage of the cheap livestock prices to remain profitable, but they are still challenged when ground beef is selling at $2.89 per pound and pork chops are receiving less than $4 per pound. Of course, those price tags were collected in one sample on Memorial Day weekend, when the grocery stores were aggressively featuring meat to get customers to buy other products. We can expect those prices to be a little artificially low, but still instructive. The indexed prices of retail beef and pork are within roughly 5 percent of their highs and lows of the past year, and in many cases, less than 1 percent higher than they were a year ago.

And yet, there are consumers who are unaware that, despite “the rising cost of food,” meat is still available at fire sale prices.

This Memorial Day weekend, you couldn’t walk through any park or neighborhood without being greeted by that welcome summer smell of burgers and brats on a charcoal grill. Holiday-makers had an extra reason to enjoy those meat products this year: They are probably cheaper now than they will be at any point in the near future.

Corn prices have risen to two-and-a-half times their summer 2006 levels and the soybean meal price has doubled, leading to greater prosperity for grain and oilseed farmers; however, it’s not such welcome news to those who raise livestock. Pork Magazine published estimates pegging losses for farrow-to-finish operations at about $10.80 per animal ($4 per cwt) while a University of Nebraska study showed that without aggressive hedging, cattle feeders may be facing losses up to $90 per animal.

Usually in an environment like this, the finger of blame starts pointing at meat packers. As it happens, meat packers are taking advantage of the cheap livestock prices to remain profitable, but they are still challenged when ground beef is selling at $2.89 per pound and pork chops are receiving less than $4 per pound. Of course, those price tags were collected in one sample on Memorial Day weekend, when the grocery stores were aggressively featuring meat to get customers to buy other products. We can expect those prices to be a little artificially low, but still instructive. The indexed prices of retail beef and pork are within roughly 5 percent of their highs and lows of the past year, and in many cases, less than 1 percent higher than they were a year ago.

And yet, there are consumers who are unaware that, despite “the rising cost of food,” meat is still available at fire sale prices.