In this weekly Commodities Watch column, John T. Barone, president and commodities analyst for Market Vision Inc., offers a snapshot of the state of commodities for restaurants.
While most were busy focusing on turkey last week, cattle prices made a move – jumping from $125 to $128/cwt.
Forward cattle contracts for 2013 are averaging $133.50, 8.7 percent above 2012 levels. Both on-feed and off-feed inventories are tight due to two consecutive drought years. 2012 beef cow slaughter is 3.9 percent below a year ago. Total year-to-date beef output is 1.9 percent below 2011, and 2013 production could be down as much as 4 percent. Both steak and ground beef prices have had double-digit percentage increases this year and more of the same is expected in 2013.
Beef prices hit record highs in June 2012. Those levels will be exceeded in spring 2013. The only damper on beef prices is slumping consumer demand at the retail level. How the government responds to the fiscal cliff in terms of taxes and disposable income will also have a big impact on beef demand in 2013.
RELATED: Join a free webinar with John Barone on the U.S. drought's impact on commodities Thursday, Nov. 29 at 2:00 p.m. eastern. Register now.
Contact John T. Barone at [email protected].
