What is in this article?:
- No commodity cost relief in sight for restaurants
- Beef challenges operators
NRN columnist John Barone says restaurant operators can expect high commodity prices going into 2013.
Restaurant operators should expect high commodity prices in 2013, particularly for beef and pork, as a result of the U.S. drought that devastated corn crops, according to speakers at a webinar from Nation’s Restaurant News and sister publications Supermarket News and Corn & Soybean Digest.
Althoughprices might recover in 2013, since it takes only 6-7 weeks to raise the birds from chick to market-weight broilers, production of hogs, which take six months to reach market weight, won’t likely be back to pre-drought levels until late 2014. Prices of cattle, which can take up to two years to raise, will likely stay high into 2016, according to Corinne Alexander, an agricultural economist at Purdue University.
NRN columnist John Barone, president of Market Vision Inc., said chicken breast was a bright spot on the gloomy commodity outlook.
“The takeaway is to see how you can use more [chicken] breast meat on your menus,” he told attendees of the webinar, titled “What’s Ahead: Gauging the Drought’s Impact into 2013.”
The panel was moderated by Supermarket News editor-in-chief David Orgel. Register for the free on-demand replay.
Barone and Alexander said that the corn shortage had resulted in higher feed prices, which in turn had led to farmers reducing their poultry flocks, as well as their hog and cattle herds, rather than pay to feed them.
As a result, 10,000 fewer meat chickens per week are entering the market. That reduction in 20,000 wings has resulted in what Barone projects will be a 75.8-percent increase in wing prices for 2012.
“Breast meat may as well be a different animal,” he said, noting that, the size of the average chicken breast is up, and unlike dark meat chicken, there’s little demand for breast meat overseas. So he expects breast prices to be up just 7.8 percent for the year.
He said that an early slaughter of hogs in the aftermath of the drought had resulted in a short-term pork glut, but it also meant supply would be lower next year and prices would likely rise.