Meat Prices Remain Buoyant
The price of meat has been surging this year, and that trend does not show any signs of slowing. Per the Washington Post, the United Nations Food and Agriculture Organization just recorded the seventh consecutive months of rising meat prices across the globe.
Additionally, the price of pork soared 2.6% in the month of April, which is 4.8% higher than a year ago, while beef prices rose 3.3% in April YoY. Data from the U.S Bureau of Labor Statistics found that consumers were paying roughly 11% more for a chicken breast in March 2021 from a year earlier.
These costs are soaring even higher when compared to the pre-pandemic prices of 2019. A report from Rabobank, highlighted by Food Ingredients First, found that US beef prices in April were 18.5% higher at wholesale and 11.5% higher at retail than the same month two years ago.
Major beef producing countries are seeing prices soar even further. The aforementioned Rabobank report found that rising demand in China drove April beef cattle prices up 9% year-over-year, which is a 30% increase from 2018. As MRP has covered for years now, China continues to struggle with the ripple effects of sporadic outbreaks of African Swine Fever (ASF), a hog-borne virus that carries a near-100% fatality rate for the animal. ASF and the mass culling of potentially infected pigs that comes along with efforts to contain the virus devastated China’s pork supply in 2018-2019, killing off about half of the country’s entire herd of hogs.
Since the country’s domestic supply of pork – the most popular protein in the country – has yet to recover, the world’s most populous nation has largely relied on imports to fill the gigantic gap in meat supplies. According to Meat and Livestock Australia (MLA), China broke a record in March, importing more than 1 million tonnes of meat from around the world.
Per Australian Broadcasting Corporation, Chinese meat imports for the first quarter of 2021 were up 21% on the same period last year.
Reuters writes that Argentina, which is the second largest beef supplier to China, has had to halt exports in May for a month due to rising inflation and rising demand from Asia. Due to this, domestic beef prices have jumped 60% in a year.
Recently, the United Nations Agency said the surge in beef prices is contributing to the highest food prices since 2014. A poll conducted by the Morning Consult, featured in the New York Post, found that 65% of Americans have noticed their red meat purchases have become more expensive. Further, one-third of respondents said their grocery bills have increased since the beginning of the year, with 25% of Americans reporting they have been purchasing fewer meat items to cut their spending. The poll surveyed 2000 grocery shoppers across the US.
Grilling Season Brings Additional Pressure
Meat prices are expected to see a seasonal demand surge as a post-pandemic summer, filled with barbecues and gatherings, is finally here. The 15-week period between Memorial Day and Labor Day, coined as “grilling season”, is expected to cause consumers and restaurants to shell out more for their meat products.
Yahoo Finance recently interviewed restaurant owner and butcher Melissa Metzger, who said before the pandemic she could buy beef tenderloin at $10 per pound, but that number has now skyrocketed to $28 per pound. She went on to say that the high prices in May drove in the lowest level of business in three years.
Beef is forecast to see the most significant price hikes, as Business Insider reports it is the best-selling meat in America, reporting that beef sales soared 23.7% in 2020 to $30.3 billion.
As demand continues to pick up, meat will have to be produced and transported even faster during grilling season, leading to rising transportation costs. The Washington Post found that it normally costs between $6,000 to $7,000 to run a truck from the West Coast to the East Coast, but high demand for meat and a shortage of drivers has skyrocketed that number to nearly $12,000.
JBS Cyberattack Creates Headwinds
Headwinds for the meat producers and consumers alike don’t stop there. This week, the largest meat company by sales, JBS, was the victim of a serious cyberattack. That came on the heels of the Colonial Pipeline hack MRP recently highlighted.
The Wall Street Journal writes that the cyberattack forced JBS to shutdown multiple US plants, which left buyers scrambling for alternatives and added pressure to the meat industry’s abundant supply chain issues. Meat-market experts are predicting the attack will drive consumer prices even higher during busy season.
Bloomberg noted that the incident left meat prices a temporary mystery on Tuesday morning, as the US Department of Agriculture could not release wholesale prices for pork and beef, crucial numbers that agricultural markets rely on.
During the height of the pandemic last spring, the CME group launched a new pork futures contract as the meat industry grappled with widespread shutdowns. Bloomberg writes that the pork contract was up 3.6% on Tuesday, up to a record $1.3135 per pound, while the Wall Street Journal reported choice cuts of beef surged $3.59 to $334.56 per hundred pounds, the largest increase in nearly a month, amid the JBS ransomware attack.
JBS has made significant progress toward reversing the damage done by the cyberattack, and the company expects a majority of its plants to be fully operational again by the end of the day Wednesday, per VOA news. However, as we have seen with the Colonial Pipeline hack last month, even if a cyberattack is resolved within a few days, it can severely affect the price of the commodity for weeks.