Cow Prices Jump Over the Moon

U.S. cattle prices are surging again, a fresh blow to consumers already stung by record costs for steaks and ground beef. Live-cattle futures leapt to an all-time high of $1.705 a pound last week, reflecting concerns that domestic cattle supplies are even tighter than many analysts expected. Futures have risen 11% since mid-August and 23% for the year, among the best-performing U.S. commodities. Analysts said the latest jump in cattle prices likely would be passed along to grocery shoppers in the next few months. That would push up retail fresh-beef prices that soared to a record $5.924 a pound in September, a 20% increase over a year ago, according to the U.S. Department of Agriculture. Cattle and beef prices have spiked in the past several years as drought in the southern U.S. Great Plains dried out pastures and raised costs for hay and other feed, forcing ranchers to cull herds. Now, weather conditions are improving, prompting ranchers to hold on to more breeding animals in order to expand herds. While the rebuilding efforts could ease supply constraints in coming years, they are curtailing the number of cattle moving through the supply chain now. U.S. beef production will tumble 5.3% this year, to 24.4 billion pounds, the USDA estimates, a shortfall that is driving up beef costs for restaurants, grocery stores and food-service companies. “It’s a nightmare,” said Andy Wiederhorn, chief executive of Beverly Hills, Calif.-based burger chain Fatburger North America Inc. “The forecasts for beef have been consistently wrong and price increases significantly higher” than expected earlier in the year. Fatburger, which has about 150 restaurants in 30 countries, has raised some burger prices this year, generally by 25 to 50 cents, in an effort to keep the closely held company’s profit margins stable, Mr. Wiederhorn said. On Thursday, live-cattle futures rose 0.15 cent, or 0.1%, to $1.6535 a pound at the Chicago Mercantile Exchange, about five cents shy of last week’s record...more