Meat prices set to skyrocket
A dwindling supply of corn has caused farmers to cut herd sizes. Meat prices are responding.
Got a big freezer? Might be time to stock up on meat.
Bloomberg reports that U.S. meat prices may hit record highs this summer, now that farmers have cut their herd sizes to the smallest in decades.
Already, prices are climbing. Wholesale pork saw a 25% increase last week to nearly 91 cents a pound. Beef is up to $1.69 a pound -- the highest price in nearly two years. In March, chicken had the biggest gain in 20 months.
Prices are pushing up because of the classic combination of not enough supply and growing demand. The economy is marching upward, offering new jobs and more money.
But at the same time, the price of corn has doubled since former President George W. Bush set targets for higher ethanol usage, Bloomberg reports. More corn than ever is being used to make ethanol, leaving farmers in a bind when it comes to feeding their animals. Thus the smaller herd sizes.
Meat-industry analysts say the summer grilling season is going to push demand even further, and meat prices could hit record highs over the next three months.
Post continues after video:
Keep in mind that these are wholesale prices, not the marked-up prices you see at the grocery store.
Who are the winners and losers here? Clear winners are livestock producers such as Smithfield Foods (SFD). The company has already estimated that its hog-rearing unit will be profitable for the first time in years, Bloomberg reports.
In the loser category are grocery stores, which may end up taking some hits to try to keep meat prices competitive. Some of them might eat the price increases to keep meat sales steady.
Another winner might be the American consumer. Researchers have said for years that we eat too much meat, and that doing so increases the risk of cancer and other ailments. Cutting back on meat, for many of us at least, isn't that bad of an idea.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The solid report comes a month after the retailer closed all of its Canadian operations.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.