Meat Prices

Since this week's ads are so lackluster, we're taking the opportunity to discuss beef and pork prices.  You've probably noticed both meats have become real pricey during the past few months.  The driving factors behind rising meat prices are complex to explain and beyond the scope of this blog.  However, the easiest way to actually watch meat price trends is via three simple commodity futures price charts.  Cattle and hogs are trades on the Chicago Mercantile Exchange.  They are one of the older, traditional commodities that have been traded since the Good Ol' Days.  The three charts below pretty much tell a story that doesn't need a lot of explanation from the bog author.  Meats have been on a real "tear" during the past few months and appear to have topped (along with a wide range of other commodities from silver to crude oil, etc).  Meats are generally considered an "elastic" commodity.  In other words, if prices stretch too high, demand will begin to stretch in the opposite direction and prices will snap back like an overextended rubber band.  Afterall, when gas is nearing $4 a gallon, just how much personal disposable income do people have to spend on $10 a pound steaks and three dollar pork chops?  Not a whole lot.  Meat prices will have to continue falling much farther before price reductions begin showing up at the supermarket counters.  Retailers will continue to run specials but, by and large, meat looks to be pricey throughout this summer season.  We'd guess beef will take a hit in the fall season but how much lower prices will go is strictly a crap shoot.  Feedlot commodity beef prices have risen to a point where they are making locally raised grass fed beef a viable option for even price-conscious consumers.

We eat very little beef ourselves but we do follow the price trends mostly because they are fun to watch.  Most of our animal protein comes from turkey and chicken and prices for bird parts continue to remain affordable.  We do like to bake a pork roast or grill some bonbe-in pork chops once in awhile but with these prices, pork has fallen out of favor for us.  Why spend $3 a pound on pork when bone-in chicken breasts can often be had for a buck a pound?  Basically, it's all protein anyway so why pay through the nose for it?

OK, with that introduction here are the charts.  The first one is the weekly chart for feeder cattle.  Feeders are always priced higher than "finished" cattle.  When a bovine comes off a feedlot, it is considered "finished."  I guess you could take that word in more ways than one, eh? 

The next chart below is for Live Cattle. This is the contract that's traded for cattle ready for market--the ones that wind up in shrink wrap in your local market.  That recent high price was at or very near record levels for beef.  Anything over 120 in the slaughter market is a pretty unsustainable level.  Consumers simply can't afford to eat much beef at those nose bleed prices levels.

Below is our final chart--Lean Hogs.  Nobody calls them fat hogs any more.  Their DNA has been modified and manipulated to the point where they really aren't fat hogs--they've bred most of the fat right out of those porkers.  Strange, but true.

As one who has watched commodity prices since 1976, I'd guess hogs will drop back down into the $80 level during late spring. (It's possible the summer low price could be down in the mid to low $70 range!) That should be enough of a drop to bring pork chops and roasts into an affordable price range, especially when run on special.  I'm guessing we might see pork roasts well under $2 by July 4th.  I sure hope so because that would mean some reasonably priced pork chops just in time for the summer grillin' season.

Well, there you have my two cents worth on that situation.  Have a great day & Many More Cheers, jp