U.S. wholesale beef prices rose to an all-time high on Friday as the delayed spring grilling season is heating up and as supermarkets buy meat for the May 27 U.S. Memorial Day holiday weekend, commonly seen as the unofficial start of the summer cookout season, analysts said.
The cold soggy start to spring put outdoor cookouts on hold throughout most of April, but temperatures are seen climbing in the coming weeks, prompting grocers to stock up for a seasonal bump in sales of steaks, burgers and other cookout favorites.
The U.S. Department of Agriculture on Friday reported the wholesale price for choice beef, commonly called the cutout, at $201.68 per 100 lbs (cwt), eclipsing the previous record of $201.18 set on Oct 16, 2003.
"You're now finally getting the seasonal rally occurring for beef that's about three-weeks late getting started," said Chicago-based Linn Group analyst John Ginzel.
"I suspect some retailers are booking product for Memorial Day features," he said.
National Cattlemen's Beef Association (NCBA) weekly retail scanner data shows Memorial Day ranks third in weekly holiday beef retail sales at about $370 million, behind U.S. Labor Day sales of $380 million. The U.S. July Fourth holiday is No. 1 at around $400 million.
Record-high wholesale beef prices could increase even more the lofty beef prices at grocery stores, analysts said.
The average retail beef price in March hit a record $5.30 per lb, surpassing the previous record of $5.15 in November, according to the government's Economic Research Service.
"The cutout's explosion to a new record puts us in pretty rarified air. That increases the chances of push back by retailers against higher prices," said Oak Investment Group president Joe Ocrant.
"Conversely, the cattle numbers are at their lowest in more than 60 years and the grilling season is just getting underway, postponed by the bad spring weather," he said.
A prolonged dry spell in the U.S. southwest, which followed a historic drought in the Plains, damaged pastures. The lack of moisture drove up feed costs and shrunk the herd to its smallest in 61 years.
Armed with the knowledge that consumers were keeping a close watch on their purse strings, the NCBA, funded by the Beef Checkoff Program, is doing its part to ensure that beef stays on barbecue grills.
"There are a variety of products and price points that will fit anyone's budget. Regardless of what beef prices do, there are still a lot of cost savings options for Americans to include it in their diet," said NCBA's Trevor Amen.
Traditional grilling items, such as filets, ribeyes, tenderloins and ground beef, will remain the top cuts, he said but there will be mid-price items like flat iron and ranch cuts as well.