As some of you who regularly read this blog are no doubt aware, from time to time I will comment on the cattle/beef and hog/pork markets as those are the markets that I cut my teeth on and still are my bread and butter. While the consumer has thus far been insulated from any negative fallout from the massive money creation of the Fed and its QE programs, something has been happening in the livestock markets which will affect everyone who enjoys a good quality steak or beef roast. What I mean by this is that a shortage of cattle has sent wholesale beef prices soaring into record all-time high territory with the trade unsure of just how high prices are going to go before this balloon runs out of hot air.
Take a look at the following chart of the wholesale price of choice beef ( this is a composite price). I have included the data going back exactly 4 years to give you a sense of what has been quietly occurring. Beef prices have increased a whopping 65% in this period! Think about that again!
Yet, many consumers have not yet noticed it because grocers and restaurant owners have been trying to absorb some of the price rise so as not to hurt their business. They share the same concern that many of us also have, namely, an economy, that while the consensus is that it is slowly improving, certainly has not experienced any of the type of growth rates that we are accustomed to seeing with economies coming out of recession. They are aware that consumers remain extremely price conscious and thus have opted not to pass on the bulk of the increase in prices. That is about to change and change rapidly.
The price rise has been of such magnitude that they are no longer in a position to absorb the impact of the high prices without passing it on the consumer. It generally takes a while for the beef that has been purchased to work its way through the pipeline so the brunt of this increase will not show up for a few more weeks, but show up it certainly will.
Just get ready folks - that steak is going to seem like a meal that only royalty can partake of! Personally I am of the view that it is too bad that beef is a perishable commodity - I could have sold gold and loaded up on beef steaks and unloaded them out of the freezer and retired had I been able to do that!
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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