Consumers Facing Higher Beef Prices

DENVER (AP) â€” First it was the electric bill. Now consumers are paying more at the grocery store for a pound of beef. <br><br>In both cases, winter shares the blame. <br><br>The return of a colder, wetter

Friday, January 19th 2001, 12:00 am

By: News On 6

DENVER (AP) â€” First it was the electric bill. Now consumers are paying more at the grocery store for a pound of beef.

In both cases, winter shares the blame.

The return of a colder, wetter winter in some Western states has contributed to higher beef and cattle prices by reducing supplies, according to livestock industry analysts.

``You have impacts on either extreme whether it's really hot or really cold, probably not unlike on people, though the emphasis on cattle is how it affects weight gain,'' said Bret Fox, a spokesman for ConAgra Beef Co. in Greeley.

Cattle use more energy to sustain themselves in colder, wetter weather so they gain weight at a slower rate, he said.

``Only when they reach a certain degree of fatness are they ready to market,'' Fox said. ``When you have weather that slows them down, you have fewer cattle that are market-ready.''

That means a tighter supply in the industry at a time when several factors have combined to push prices to near record levels.

The spot price for live cattle on Thursday was 79.62 cents a pound on the Chicago Mercantile Exchange, which could be on pace to break a record, said Chuck Levitt, a senior livestock analyst at Chicago-based Alaron Trading Corp. The spot price in September was 68.67 cents a pound.

The wholesale beef price is about $1.31 per pound this week, close to the record set on Jan. 2 of about $1.32 per pound.

Although the previous two winters have been drier and warmer than normal, this season's weather has been colder in cattle-producing areas such as Colorado and western Nebraska and Kansas.

``Compared to the last couple of years, this (winter) seems a little more difficult,'' said Chuck Lambert, chief economist for the Denver-based National Cattlemen's Beef Association.

Lambert said the hardest recent winter for the cattle industry was 1992-93, when some feedlots were reduced to mud pits after a spate of blizzards.

Last summer's drought conditions in some states raised concerns about feed shortages, but Lambert said in general it appears there has been enough moisture this winter to start the grass growing in the spring.

Until then, he said, the impact of winter weather is only part of what is driving the market.

``This weather phenomenon is kind of a short term factor that just compounds the other factors that are in play,'' said Lambert.

He said the other factors affecting the market â€” including an increased consumer demand for beef in recent years â€” will remain in place when the winter weather conditions disappear this spring so it is difficult to predict what will happen to prices.

However, he said cattle prices typically increase in the spring and then decline during the summer. Because the prices were high during the winter, he said the spring increase may be lower than usual.

``We realize there are limits to how high beef prices will go for consumers,'' Lambert said. ``The market will pretty much determine what point that is.''

Levitt said cattle prices could come down once the weather has moderated and retailers have passed along the higher prices to the consumers.

``We're still looking at some storms lining up, moving from west to east in major cattle feeding areas,'' he said. ``Until that pattern changes, we still have to pay attention to the weather.''

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On the Net:

National Cattlemen's Beef Association: http://www.beef.org