Cattle futures surged to an all-time high in Chicago on signs of tight supplies heading into the peak U.S. summer grilling demand.
The cattle herd in the U.S. started the year at a 63-year low, and as of June 7 the number of cattle slaughtered slid 6.3 percent this year from 2013, U.S. Department of Agriculture data show. The drop comes a month before the Fourth of July holiday, the most popular day for Americans to grill outdoors, according to the Hearth, Patio and Barbecue Association.
Consumers will pay as much as 4 percent more for pork this year, and costs for beef and veal will rise as much as 6.5 percent, the most of any food group, the USDA forecasts. There’s “no relief” for protein eaters, and record prices for beef probably won’t let up for the next 18 months, Ricky Volpe, an economist with the USDA’s Economic Research Service in Washington, said May 23. Higher costs have forced companies including Chipotle Mexican Grill Inc. to boost menu prices.
“The cattle jump is purely a supply-deficit market right now,” Rich Nelson, chief strategist at Allendale Inc. in McHenry, Illinois, said in a telephone interview. “We see higher trade for the rest of this month.”
Cattle futures for August delivery gained 1.1 percent to settle at $1.46625 a pound 1:14 on the Chicago Mercantile Exchange after touching a record $1.473. The price has climbed 8.9 percent in 2014, the best start to a year in a decade.
Tight cattle supplies spurred retail ground-beef prices to climb to $3.808 a pound in April, the highest in at least three decades, according to Bureau of Labor Statistics data. Pork-chop prices also reached a record, after a virus killed as many as 8 million pigs in the U.S.
Feeder cattle extended a rally to an all-time high. Futures for August settlement gained 1.1 percent to close at $2.0815 a pound after reaching $2.08425. The most-active contract is up 24 percent this year.
Hog futures for August settlement rose 0.4 percent to $1.31275 a pound.