A turn to warmer weather in the United States and pent up demand for steaks and burgers ahead of the traditional grilling season sent wholesale prices for choice-grade beef to a record high of $205.91 per hundredweight on Tuesday, up 36 cents from the previous record set late last week.
Beef prices normally rise in the spring but this year's smaller beef supply coupled with the late arrival of warm spring cookout weather, triggered a strong increase in the beef market, analysts and traders said.
"Beef is seasonally strong this time of year. It usually tops out about now but what is different this year from past years is the beef supply is lower, so there is some question if the top is in," said Don Roose, president of U.S. Commodities, Des Moines, Iowa.
The cold soggy start to spring put outdoor cookouts on hold throughout most of April and early May, but with forecasts for more typical spring weather this week, grocers stocked up for a seasonal bump in sales of steaks and ground beef.
"The seasonal demand is here, the warmer weather and the grilling season most definitely is helping," said Dennis Smith a broker for Archer Financial.
Chicago Mercantile Exchange (CME) live cattle futures were lower in most contracts despite the record high beef price, as the higher beef market had been anticipated. The spot June cattle held firm due to the pressing demand for beef to meet the improved cookout atmosphere.
"Some of them are thinking beef may be topping out at $206 and we're just barely under that so that is why you're seeing a selloff in futures," Roose said.
Demand for beef traditionally escalates just ahead of the annual U.S. Memorial Day holiday, which is May 27 this year.
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.
The high price for beef has led some analysts to forecast a drop in demand soon as consumers shift to lower-priced pork and chicken.
But for now the beef market keeps climbing.
"A lot of people thought $205 might be the top but we've gone through that so there's no indication the top is in, it looks like we'll go even higher," Smith said.
_0">The record-high wholesale beef prices likely will increase grocery store beef prices, which are already at lofty levels, 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. (Addititional reporting by Theopolis Waters and Michael Hirtzer in Chicago; Editing by Bob Burgdorfer)