Workers at The Butcher & Larder, in Chicago’s North Branch industrial corridor, break down chucks of beef into different cuts, as well as meat for ground beef and bones for making beef stock.
March 18, 2017 1:02 AM
Beef to be abundant, prices may go down
Lisa Green | The Journal Gazette
Sure, it snowed Friday, but some people have already had their grills out this year.
The U.S. Department of Agriculture says this will be the largest commercial beef production year since 2011, but how much and when that will affect pricing for what you put on the grill depends.
“It certainly makes a difference whether you’re quoting a pound of hamburger or tenderloin steak,” said Joe Seyfert, owner of Custom Quality Meat, which has two Fort Wayne-area locations.
USDA data indicate prices running about 3 percent to 5 percent lower than a year ago. Seyfert expects that based on the size of the national herd, prices could peak in April and decrease in the summer.
But it depends on what the customer is interested in.
“The market for leaner meat, let’s say if we had a 70 percent lean and 30 percent fat hamburger, that market is actually tightening up, and the market with 90 percent lean and 10 percent has plenty of supply,” Seyfert said.
Retail beef prices on average have been slowly but steadily declining from historic highs two years ago that were largely the result of a yearslong drought in cattle country. The beef industry, though, has rebounded, creating the higher production expectation for this year.
Lee Albright, co-owner with his wife, Karen, of Albright’s Meats & Deli, said multiple factors weigh into beef prices.
If grain prices are up, beef prices increase, but if grain costs less, beef prices decline.
Right now, Albright said beef exporting is high “and that is just as big of a player – how much foreign governments are buying from us, and right now, they’re buying quite a bit.”
Warm weather can play a role, too. In the winter months, people tend to like beef parts such as rounds or the shoulder, which is often used in stews.
“The ends of the cow cost more in the wintertime because there’s a higher demand in the wintertime,” said Albright, who also has two Fort Wayne locations.
When the weather is warm, people tend to want steaks – T-bones, rib-eyes and sirloins – the meat that comes from the center of the cow.
Last month, when there was a warm streak, some people fired up grills. So meatpackers, Albright said, raised some prices earlier than usual based on demand.
“I haven’t heard of meat prices going down; … all we’ve seen is overall price increases,” Albright said. “What we’re seeing is the market getting stronger right now.”
Albright prefers lower prices; he said that’s when his business makes more money because people are generally willing to spend more.
But at least one analyst says competition among grocery retailers could contribute to some pricing strategies that benefit consumers.
“We’re going to see some of the most aggressive advertising for beef cuts of all types because (retailers) are striving to not just be competitive with their profits, but they’re also competing for market share,” said Lance Zimmerman, manager of research, analysis and data for Cattle Fax, a beef industry research group.
Beef advertisements in particular are considered key in driving foot traffic for the four major grilling holidays – Memorial Day, Father’s Day, Fourth of July and Labor Day.
Deflationary food prices have led consumers back to the meat counter, according to a recent Food Marketing Institute report titled “The Power of Meat.” And while shoppers still consider price per pound the top consideration, they’re also increasingly shopping for attributes they consider to be healthier or more sustainable, such as organic and grass-fed beef, the report said.
At Pete’s Fresh Market, a family-owned grocery chain in Chicago, meat buyer Paul Vassilakis said he’s already planning his advertisements for grilling holidays. Despite the gradual lowering of beef prices in recent years, there’s still week-to-week volatility for certain cuts, Vassilakis said. For example, prices for “middle meat” cuts, which include skirt steaks, recently “skyrocketed.”
But Vassilakis believes there will be plenty of good deals this summer.
“I think it’s going to be a good year,” Vassilakis said.
The Chicago Tribune contributed to this story.