Cattle futures jumped to a record in Chicago as rising demand for U.S. beef erodes supplies of animals for slaughterhouses and boosts meat costs for food retailers, including Wal-Mart Stores Inc.
The U.S. cattle herd is the smallest since 1958 as beef exports surged 19 percent in 2010 to about 2.3 billion pounds (1.04 million metric tons), according to the U.S. Department of Agriculture. Before today, cattle prices jumped 23 percent in the past year, fueled by a global economic recovery that is boosting meat demand in emerging economies, including China.
Global food costs jumped to an all-time high in February, the United Nations said. Surging corn prices have boosted beef and pork as producers paid more for livestock feed. Food costs contributed to riots across North Africa and the Middle East that toppled leaders in Egypt and Tunisia. U.S. consumers may pay as much as 5 percent more for meat this year, the government has forecast.
“World demand and foreign demand for beef is so strong,” said David Kruse, the president of CommStock Investments Inc. in Royal, Iowa. “It’s essentially diverting supply away from the U.S. as we’ve seen a strong increase in beef exports.”
Cattle futures for June delivery gained 0.8 cent, or 0.7 percent, to $1.167 a pound at 10:36 a.m. on the Chicago Mercantile Exchange. Earlier, prices touched $1.1725, the highest for a most-active contract since the commodity started trading in 1964.
Wholesale beef has jumped 17 percent in the past year to the highest level since at least January 2004, and wholesale pork is up 22 percent, USDA data show. Higher prices are increasing costs for restaurants and retailers.
“We’re all dealing with a very different inflationary environment than we were in just a couple of years ago,” Brian Cornell, chief executive officer of Wal-Mart’s Sam’s Club chain, said in a presentation yesterday. “It’s going to continue to impact the prices we pay for beef.”
Feeder-cattle futures for August settlement rose 0.775 cent, or 0.6 percent, to $1.369 a pound after reaching a record $1.37075.
Feedlot operators buy year-old animals that weigh 500 pounds (227 kilograms) to 800 pounds, called feeders. The cattle are fattened on corn until they weigh about 1,200 pounds, when they are sold to meatpackers.
Hog futures for June settlement added 0.125 cent, or 0.1 percent, to $1.018 a pound in Chicago. Earlier, the price gained as much as 0.7 percent to $1.0235, the highest for a most-active contract since at least April 1986.
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