Firing up the grill to serve beef over the Fourth of July holiday will cost about 10% more than last year. Americans will consume some 191 million pounds of hamburgers and steaks during the biggest grilling event of the year.
The price increase is due in part to strong domestic consumer demand for beef and a 19% growth in the export market. However, an overriding factor is the rising cost of corn due to the increasing number of ethanol plants, says Ron Plain, University of Missouri agricultural economist. In 2000, 6% of the U.S. corn crop was used to produce ethanol. More than 25% of this year's corn crop will be processed for ethanol, leaving less corn for livestock feed.
"A smaller number of cattle were placed on feed last winter, and we are seeing lighter slaughter weights. These last two factors are closely tied to higher corn prices caused by the tremendous increase in ethanol production," Plain says.
The average retail price of all Choice beef cuts at the grocery store in May was $4.30 per pound, up from $3.95 per pound in May 2006. Retail beef sales projections for the two-week period around July 4 are $687 million, according to the National Cattlemen's Beef Association.