Rising beef prices which topped $200 multiple times throughout the last months of 2013 helped Tyson Foods beat its first-quarter target.
Reuters reports the largest U.S. meat processor sold more beef at higher prices in the first quarter as retail demand improved.
Tyson’s first quarter beef sales, which ended Dec. 28, increased seven percent to $3.73 billion. Total revenue increased by five percent to $8.76 billion. The meat processor expects sales to reach about $36 billion during the fiscal year.
Beef prices continued to rise going into 2014 with Choice boxed beef prices moving steadily higher to top $240 on January 22. Prices increased due to a national cattle herd at a 61-year low of 89 million head and retail supplies limited by shortened holiday schedules at the close of 2013. The polar vortex moved arctic temperatures into cattle producing states which limited cattle weight gain and delayed shipments to auctions.
Consumers will continue to notice rising beef prices at the retail level this year. A survey from SpenDifference shows restaurants will begin passing increased food costs onto patrons. Survey results show 83 percent of restaurant chains raised prices in 2013 and 92 percent plan to increase menu prices this year. Price hikes are expected to increase by an average of 1.8 percent compared to last year’s 1.65 percent.
Food companies have been hesitant to pass higher food costs on to customers as consumer spending remains restricted following the recession.
SpenDifference President and CEO Maryanne Rose says costs for restaurant chains are expected to be flat this year, except for those serving a high amount of beef.
Beef prices are expected to remain high for another two years as herd rebuilding will take atleast that long to return inventories to pre-drought levels.