NEW ALL-TIME HIGH

I bet you thought this was going to be about the stock market after the Federal Reserve minutes confirmed that Yellen will be printing for eternity. Yes the .1% are thrilled and have programmed their HFT supercomputers to buy buy buy. This story is about the common folk who need to buy food to eat. The all-time high in the stock market has no meaning to 90% of the population, but an all-time high for beef impacts every middle and low income person in the country who have seen their incomes stagnate since 1998. This won’t show up in the CPI numbers because the BLS drones assume you switched from beef to Alpo, therefore there was no price increase.

Beef prices hit all-time high in U.S.

Extreme weather has thinned the nation’s cattle herds, roiling the beef supply chain from rancher to restaurant.

Come grilling season, expect your sirloin steak to come with a hearty side of sticker shock.

Beef prices have reached all-time highs in the U.S. and aren’t expected to come down any time soon.

Extreme weather has thinned the nation’s beef cattle herds to levels last seen in 1951, when there were about half as many mouths to feed in America.

“We’ve seen strong prices before but nothing this extreme,” said Dennis Smith, a commodities broker for Archer Financial Services in Chicago. “This is really new territory.”

The retail value of “all-fresh” USDA choice-grade beef jumped to a record $5.28 a pound in February, up from $4.91 the same time a year ago. The same grade of beef cost $3.97 as recently as 2008.

The swelling prices are roiling the beef supply chain from rancher to restaurant.

Norm Langer managed to go two years without raising prices at his famed Westlake delicatessen.

But last week, he reluctantly began printing new menus showing a 50-cent increase for sandwiches at his 67-year-old restaurant.

Langer accepts it’s one of the perils of business when your bread and butter happens to be corned beef and pastrami. But he fears he may have to raise prices again, driving away customers.

“No beef, no delicatessen. That’s the bottom line,” Langer said after a typically frenetic lunch service. “Jewish delis aren’t vegetarian, they’re based on corned beef and pastrami. Things are beyond my control. With the price increase, I hope my customers are tolerant.”

Langer said beef prices are the main reason his wholesale food costs have risen 45% in the last two years — much of it passed from his longtime supplier, R.C. Provision Inc.

The half-century-old Burbank company prepares corned beef, pastrami, roast beef and chili for L.A. icons such as Canter’s Deli, Pink’s Hot Dogs and Original Tommy’s Hamburgers. All the restaurants have to do is heat it up or slice it to their liking.

It’s been an increasingly difficult endeavor, with slaughterhouses driving up their prices for brisket and navel, an extra fatty portion of the belly crucial for making unctuous pastrami.

“For any profitability, you have to mark it up more and more,” said the company’s general manager, Jerry Haines, who has watched profit margins dwindle to about 1% from 5% in the last few years rather than hike prices enough to cover the increased costs.

Speaking last week at his company’s plant scented with paprika and smoked beef, Haines said small businesses like his are struggling to secure enough red meat. Slaughterhouses, also known as packers, are more likely to reserve their reduced supplies for big customers like McDonald’s.

There’s more pressure to throw the special cuts needed to make deli meat into the grinder for hamburgers. What’s left for Haines costs more. Brisket has more than tripled in price since 2008. Navel has more than doubled.

“This whole thing now is being driven by hamburger,” said the gravelly voiced Haines, who keeps years of beef prices recorded on stacks of small sheets of paper. “You take all the McDonald’s and Burger Kings across the United States; the amount of meat needed to make those hamburgers is forcing the value of other cuts of meat to go up.”

The biggest fast-food chains aren’t immune to the price pressure either. Experts say $1 value menus could soon be a thing of the past.

In October, McDonald’s said its Dollar Menu of more than a decade would morph into a so-called Dollar Menu & More, which mixes $1, $2 and $5 items. Wendy’s made a similar move last year.

Yum Brands Inc., which owns Taco Bell, said in December that it expects 4% price inflation for beef and other meats in 2014, though the company didn’t indicate whether the costs would be passed on to consumers.

That’s in line with research at the U.S. Department of Agriculture, which forecast all food inflation to be between 2.5% and 3.5% this year.

Soaring beef prices are being blamed on years of drought throughout the western and southern U.S. The dry weather has driven up the price of feed such as corn and hay to record highs, forcing many ranchers to sell off their cattle. That briefly created a glut of beef cows for slaughter that has now run dry.

The nation’s cattle population has fallen to 87.7 million, the lowest since 1951, when there were 82.1 million on hand, according to the USDA. (The peak was 1975, with 132 million heads of cattle, but the animals then were less meaty and required more feed).

“We’re dealing with chronically low herds,” said Richard Volpe, an economist for the USDA. “Beef prices should remain at near-record highs this year and into 2015.”

Volpe and other experts say American consumers probably will think twice at the supermarket meat aisle, forgoing steak and ground beef for cheaper sources of protein.

“Chicken and other poultry may stand to benefit from this whole big mess,” said Smith of Archer Financial Services.

One reason why beef prices will take some time to ease: Calves require more than two years to gain enough weight for slaughter. And not every rancher will still have a herd to breed from after so much liquidation.

Kevin Kester, a fifth-generation rancher in Parkfield, about 25 miles northeast of Paso Robles, is faced with selling off his remaining 300 cows, which have provided crucial DNA for new calves. The herd is not unlike a rancher’s intellectual property — storing decades of coveted genetic material for traits such as healthy and productive birthing and meatier mid-sections (think more prime rib).

Recent rains have provided grass for a few weeks more. But the cost of keeping the cattle beyond that on expensive hay is too high.

“Twenty-plus years of genetics down the toilet,” Kester said.

http://www.latimes.com/business/la-fi-beef-prices-20140406,0,2966247.story#ixzz2yPsQfJ85

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Tommy
Tommy

I’ve really learned to hate the word fungible, and the chain on my CPI is broken.

underfire
underfire

Good for me. Course now I only have fifty head or so. When the price was crappy a few years ago is when I carried a couple thousand. Lost my butt, cattle is real hard to make money on. Then again, I guess Hillary made a killing on them.

Stucky

You can REALLY tell there are BIG increases in meat prices if you go to a place that sells really good quality beef ………. you know, a butcher shop.

Supermarkets can “hide” or dampen the costs by mixing / providing low quality shit meats. Sorry, but it’s true. Sorry if I sound like a snob.

So, a few weeks ago Ms Freud gets a couple nice slabs of RibEye to celebrate something … I already forgot what. Those two pieces were incredibly fuckme tasty ………. for over $30 bucks. Fuckme.

hardscrabble farmer
hardscrabble farmer

There seem to be a couple of misconceptions about these costs- especially when you take what they say about the price per pound. $5.28 per pound for what part? Beef cuts vary in price, burger and stew meat on the lower end, filets mignons and rib eyes on the top. Is this supposed to be an average cost per pound? The article fails to address that.

And when it comes to grades, USDA Prime sounds great, but it is the equivalent of a morbidly obese human being. Select is similar to an athlete. You cannot get a grass fed animal into a prime grade no matter how much grass it eats or how long it lives. If you want to pay top dollar for fat, than Prime is the grade for you. Further, small producers, those who bring fewer than a thousand animals to a slaughterhouse at a time cannot even get a grade on their beef because USDA graders do not work at small facilities. And why they are focusing on Prime beef which by the USDA’s own stats account for only 3% of all beef graded. No doubt, most of them would die from massive heart attacks before they could get that kind of grade.

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AWD

“substantial room” for stronger wage growth

That’s the understatement of the year. wages are going into the toilet. People are getting less and less as the dollar is worth less and less. The only people getting raises are union drone government employees.

The government can’t get enough inflation. The criminals in Washington are resting all their hopes on massive inflation. That way, the debt goes down, becomes less, up until the point where the dollar is worthless, and then there isn’t anymore debt, because the whole financial system collapses. The criminals in Washington can’t tax and spend fast enough.

The knock-on effect of beef costs are people will stop going to restaurants to pay $30 for a steak. The way things are going, when you go to a restaurant for a steak, they’ll bring you a microscope so you can see what you’re eating.

llpoh
llpoh

I have been saying for a long time that beef prices were going to explode such that only pretty well to do folks would be able to afford it.

The answer for a great many will be to substitute vegetable protein for animal protein. Not so tasty, but it will be much more affordable.

NIck A
NIck A

llpoh – is this what you’re thinking of?? http://en.wikipedia.org/wiki/Mycoprotein

“Industrial Scale” production, complete with “Industrial” Chemicals (ammonia). Add the flavouring and condiments of choice, and I gather you can get fake “almost anything” per the Quorn / TVP websites!

Personally, if I’m going to be having mushrooms, I’d prefer mine to be these (excellent taste, and a really filling mushroom variety!)

http://www.mushroom-appreciation.com/cremini-mushrooms.html

Mike Moskos

Wow, I only pay $6 a pound + 20% shipping (in 2 pound packs) for grass-finished ground beef from my Amish farmer. Not much price differential any more. Tastes FAR better too. No animal torture and because they rotational graze their cattle, the soil is becoming incredible. Even at that price, they manage to spread ocean minerals on the land so the beef is mineral rich. Even the fat from the ground beef is so tasty, I save whatever is left to sauté vegetables.

The best beef I have ever tasted came from another Amish farmer, Jacob Zook, who is a neighbor of the Amish farmer I buy from (both in Lancaster County, PA). Only had it once. Maybe it was a special cow. That ground beef was better than any prime steak I’ve eaten, even at that Brooklyn steak house that is supposed to be the best steakhouse in the U.S.

Econman
Econman

There’s no inflation. Substitute road kill for beef.
Adapt.

Econman
Econman

Wait until the dollar loses reserve status.
$20 steak will be the cheap cuts.

Econman
Econman

Americans will have no choice but to lose weight.
1st in the wallet, then in the gut.

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