Hamburger Crowns Beef Bonanza

April 17, 2015 12:00 PM
 
Hamburger Crowns Beef Bonanza

Hamburger is the new steak. Well, sort of. The fact is, today’s hamburger is hugely popular, yet it’s priced at levels once reserved for steak, notes Brian Grete, editor, Pro Farmer.

Power Hour Noon Logo“I think that what we’re seeing is the consumer accepting the higher price level, which is a true increase in demand there,” explains Grete on “AgDay” during its Pro Farmer Profit Briefing segment. “We’ve seen creative ways of pricing with retailers. Instead of the traditional per-pound pricing, per-unit pricing. It’s a way of passing on more expensive beef to the consumer without the consumer really understanding what they’re paying for price-wise. … We still see that the American consumer favors beef over pork and poultry.”

Meanwhile, the direction of the live cattle market is uncertain.

“When we look at the futures, they’re at a discount to the cash,” Grete explains. “That doesn’t really make sense because we look at the supply situation, we know what that is, historically low. We look at the demand. It’s good. I mean, the exports are going to struggle this year, obviously, a little bit more than they [did] last year, but domestic demand is still good.”

The reverse is true for the hog market. Grete recommends hog producers have downside risk protection in place.

“The price structure in there, even though we have an excess of supply right now, is actually where the futures are trading premium to the cash index, so exactly the opposite of what’s happening in the cattle market,” Grete points out. “I think that premium probably right now for the summer month contract is just too much.”

Finally, recent avian flu incidents are shutting off some export demand. That means a fuller meat counter in the U.S.

“Each little bit of excess poultry that goes on the domestic market competes with pork and beef,” Grete says.

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