Summer Beef Pricing
With the winter in our distant rearview mirror, and the April showers behind us (although Mother Nature brought those to us in March) our feet are firmly set on the path toward sunny days and sunglasses. The springtime transition is almost complete, and with summer just around the corner, everyone’s favorite summer tradition, barbecue season, is on the horizon.
In the food world, what transitions have taken place, and what is about to take place? In produce we went from root vegetables to springtime vegetables, and produce prices in general will begin to drop as availability comes on. The salmon run is about to start, and depending on the available runs we will see some fresh fish prices jump, as the demand for breeds such as Copper River King skyrocket. After all there is only one Copper River that can produce Copper River King, yet everybody wants it. High demand, singular supply, we know what happens with that. Milk and dairy prices make the annual drop as schools close: more supply, less demand.
And beef prices are going to . . . well, that’s the anomaly here. If you looked at the Chicago Mercantile Exchange (CME)—where all commodity food products are traded, and prices set—report on annual beef pricing you’d see what looks like a hundred overlapping peaks of the Grand Tetons. To the untrained eye it looks like that crazy roller coaster you might think twice about getting on. The CME sets the base price for beef based on available cattle, and projected usage. After the price is set, the purchased beef is further processed, meaning the more it’s handled, trimmed and cut, the higher the price. But there is a pattern to our market for beef pricing. The CME trades beef year around, but the demand of parts of the beef completely changes by the season.
The winter season has a great demand for roasts, (prime ribs, chuck roasts) so prices reflect the need. New Yorks and smaller cuts in the winter drop. And as barbecue season comes on, we transition to small steaks like Top Sirloins, Cap Steaks and New Yorks. As these cuts take center stage, prices on these go up. In a general sense it’s all beef, however because beef has so many facets to it, trying to predict “the one price” of beef, can make an IKEA instruction sheet look sensible. Other issues factor into this equation.
Winter beef is generally more prized than summer beef. Winter beef tends to be more tender and better marbled because its job in the winter is to stay warm and eat. Cattle in the summer are hot, uncomfortable, and stressed (for example: constantly swatting biting flies off with their tails). Winter beef eats better. There is the grade of the beef: prime, select, choice or ungraded (called “no roll” in the industry). Then, the age of the beef is a factor. Aged beef plays a huge role on pricing. If you have 28-day aged beef, remember the price of the original purchase was greater than 28 days ago on the CME. Today’s price can be entirely different. Beef with no age on it at all, is what we call “green beef.”
Comparing the price of a 28-day aged steak against a green beef cut is not comparing apples to apples, even if it is the same cut of steak. Ultimately, beef is the perfect annual case study for the law of supply and demand. But the fortunate thing about it is it happens every year, and if you follow it, you can understand how it works.
The market is the market, and being an informed consumer gives you power and understanding of what you’re purchasing. If somebody is selling you something like New York steaks in the summer at $2.99 a pound, there is probably more to that story; it’s previously frozen, imported, unknown breed, or any host of other things. And it may be worth a skeptical look. After all, some of those “old school” rules still apply. Buying a Rolex for $25 means it’s not a Rolex, or it’s stolen.
The ticket is to know that your supplier is trustworthy, and they know what they have in inventory. After all, there is a system and price structure in place that has history and credibility built into it.
Food for thought.
Now to that sunny day . . . window down, check. Left arm out, check. Sunglasses on, check. Music kickin’, check. Aaand that guy still has his studded tires on.
Yep. Springtime in Spokane.
P.S. Don’t be that guy.
Chris Patterson is the director of Business Solutions at Food Services of America. He is a 30-year veteran of the hospitality and restaurant industry. His team of six, which includes four chefs and a dry-goods expert, consult restaurants, hotels, and resorts in four states.
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