Understanding Beef Prices

As a cattle producer I personally feel the pain when it comes to the drastic decline in cattle prices but it is important for the average consumer to understand what that means for their pocket books.
​The first thing I would like to point out is that there is a supply pipeline that is filled far in advance so price declines in the live and finished markets take time to filter down to the consumer.  Today wholesale beef prices are 18% lower than this time last year but not necessarily being reflected at the retail and foodservice sectors.  While grocery store prices have declined for 8 consecutive months the price of beef sold at retailers is down 7% from this time last year.  On the flip side foodservice hasn't shown a decrease at all, in fact prices have actually increased by 2.3% even though their beef costs have decreased.  Why?
One reason is that grocery stores deal in predominantly fresh food therefore they move food through the pipeline quicker which allows them to lower costs quicker.  Foodservice prices are more difficult to lower because of the present business environment.  Rising labor costs in restaurants, rising healthcare costs and higher distribution costs all lead to higher menu prices.  As the business environment changes you may see changes in the average restaurant ticket price but not for some time.
On the flip side this widening gap bodes well for grocery store chains.  Increasing traffic in the grocery store always favors the beef aisle because it is favored among consumers.  So if you are looking to enjoy great beef and lower prices...fire up the grill and enjoy your favorite cut of meat!!!

                                                    It's Grill'n Time