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At The Butcher & Larder, a butcher shop inside the Local Foods store in Chicago, Elijah Berlow breaks down chucks of beef to be divided into different cuts, plus meat for ground beef and bones for making beef stock. Terrence Antonio James/Chicago Tribune/TNS

Falling beef prices could make for prime grilling season

CHICAGO – Brush the snow off that grill and get ready for a grilling season that could be prime for butchers and beef eaters alike.

Retail prices have been slowly but steadily declining from historic highs two years ago that were largely the result of a yearslong drought in cattle country. The U.S. Department of Agriculture expects this year to be the largest commercial beef production year since 2011.

Add that to a competitive grocery industry and some decent weather, and beef prices could be just right for consumers.

“We’re going to see some of the most aggressive advertising for beef cuts of all types because (retailers) are striving to not just be competitive with their profits, but they’re also competing for market share,” said Lance Zimmerman, manager of research, analysis and data for beef industry research group Cattle Fax.

But Kevin Jenkins said we probably can’t expect great deals on ribeyes and tenderloins as the Fargo-Moorhead area starts its peak grilling season.

The butcher at Fargo’s Prime Cut Meats said beef producers know this area is “meat-and-potatoes country.” Considering that the region has a short grilling season, they know people are willing to pay more for steaks.

“I’ve been in this industry for 25 years, and they never drop steak prices this time of year,” he said.

Instead, Jenkins said locals will find deals on chuck and rump roasts and other cuts that are better for cooking indoors.

Even an improvement in other conditions can’t offset ethanol, which he said has driven up meat prices as more corn is used to make fuel.

“You’re taking our food’s food and you’re getting fuel out of it, so that drives the price of corn up,” he said.

Sam Resha, co-owner of Fargo’s Meats by John and Wayne, said he expects a couple of steaks will be cheaper in the next month or so. The butcher shop had a good sale on New York strip last week, knocking about $5 off per pound because of lower costs, and he said ribeyes would likely be on sale this week.

“I’m not really sure about the summertime because usually that’s when they go up, because that’s when people like grilling and they can get more money out of us from it,” he said. “But I know right now it’s been kind of slow everywhere and the prices are pretty low.”

National factors

Some might say it’s about time for better deals for consumers. As the beef supply has replenished in recent years, the drop in cattle prices has outpaced the decline in retail beef prices.

Consider the average steer price for 2016 was about $121 per hundred pounds of meat, its lowest since 2012 when it was about $123, according to the USDA data.

But the 2016 annual average for all fresh beef retail prices – a composite value of beef cuts used to estimate the average retail value of total beef production – was about $5.73 per pound, significantly less than $6.03 in 2015 but still an increase of more than 22 percent from $4.69 in 2012.

That’s in part because retailers have taken the opportunity to recoup some of the profits lost two years ago, Zimmerman said. But rising per capita incomes in the U.S. and a strong export market for American beef also have kept demand high.

Deflationary food prices have led consumers back to the meat counter, according to a recent Food Marketing Institute report. While shoppers still consider price per pound the top consideration, they’re also increasingly shopping for attributes they consider to be healthier or more sustainable, such as organic and grass-fed beef, the report said.

Readers can reach Forum reporter Ryan Johnson at (701) 241-5587

The Tribune News Service contributed to this report.