Posted on: Thursday, June 2, 2005

Beef prices likely to remain high

By Sandy Shore
Associated Press

DENVER — With grilling season in full swing, retail beef prices are near record highs, thanks to tight supplies, more demand and rising fuel costs.

Retail prices for choice beef averaged $4.25 a pound in April, the latest period available from the Agriculture Department's Economic Research Service. April's price was second only to November 2003, when beef prices rose to $4.32 a pound after Canadian imports were cut off because of a case of mad cow disease.

June prices should drop slightly to a range of $4 to $4.10 because demand will ease as grilling season drops off and supplies increase, said Ron Gustafson of the Agriculture Department's Economic Research Service.

Average beef prices have increased every year since 1999, climbing from $2.87 a pound that year to $4.06 a pound in 2004, according to the research service. Beef consumption has climbed 25 percent since 1998 to 27.6 billion pounds last year.

The latest price hikes come after ranchers cut back herds because of a widespread drought that killed the grass cattle feed on. The nation's cattle inventory peaked at 103.5 million head in 1996; as of Jan. 1, it measured 95.8 million head, according to Agriculture Department statistics.

The drought has eased, prompting some ranchers to expand herds for the first time in five years, said economist Gregg Doud of the National Cattlemen's Beef Association.

"We are on the upward swing on the size of our breeding herd right now," he said. But shoppers won't see the effect of that expansion at grocery stores until 2007, he said.

The drought was only the most recent bad news for the industry. Four cases of mad cow disease in North America in recent years, including one in the United States, caused a scare.

People who eat meat contaminated with mad cow disease, formally called bovine spongiform encephalopathy, can contract variant Creutzfeldt-Jakob disease, a fatal brain disease that incubates for years after exposure. Since the mid-1990s, the disease has killed nearly 150 people, most of them in Britain.

With the discoveries, the Agriculture Department closed the Canadian border to cattle shipments in May 2003.

Now, price is the biggest issue for most consumers.