Do you remember a few months ago when Walmart started running commercials about their “steak-off”? It was the company’s attempt to bring business to their “premium beef”. I have to admit, I was one of the many who gave it a try. What did I have to lose besides $12 and possible a lousy dinner?
Let’s rewind for a minute…
Besides being a wine and beer snob, I tend to judge beef critically as well. Sure, there are plenty of people out there that are happy with just a regular old supermarket grade piece of beef. I’m not. I tend to gravitate to butcher’s shops and Angus quality beef. Why not? It’s just better.
There IS a difference when you cook up a USDA choice cut over a USDA prime. If you’re one of those well done steak eaters, well there’s no hope for you. Sorry.
Personally, I can’t stand the fillet mignon. I think it’s an overrated piece of meat. It carries a huge price tag, and for that, what do you get? A small piece of meat with little flavor, no fat and tenderness. Big whoop. I’m more of a porterhouse and prime rib steak eater. You can’t go wrong with either of these cuts.
Anyhow, getting back to Walmart…
I tried their “steak off” and to my surprise, it wasn’t that bad. It was Walmart premium. Not black Angus premium, so knowing that, I wasn’t too let down. I got a prime rib and it was $11 & change. Not bad. I cooked it medium rare, sautéed up some onions, peppers and mushrooms and in the end wasn’t that bad at all. Now, this was back a few months ago. Since then I haven’t purchased any Walmart steaks and there’s no particular reason for that…
Until last night…
I had to pick up a few things so I went to the local store up the road from my house. As I walked in, I went pass the meat and poultry section and I saw a sign for their premium beef. I thought to myself, “what the hell, why not?” So I went over and picked up the last prime rib they had and walked up to the register. I checked out and to my surprise, my total bill was a bit more than I thought.
I went in there for milk and eggs and I have a good idea of what those cost, but something didn’t add up. I asked the cashier if she was sure and if I was charged double for something and she ran through the items I purchased…when she got to the prime rib she said, “and you got a piece of beef for $15.75.”
I said “what?!! How could that be?” She said I paid $13 and change per pound. Now that’s quite a price difference from just a few short months prior.
Earlier today my colleague, Eric Dickson, sent me an email. In the email, he pointed out that beef prices have run up to all-time highs. Thinking about my experience last night, I put 2 and 2 together and boom, there’s the answer.
But why?
Here’s the skinny: Extreme weather in the West and South have thinned the beef supply to levels not seen since 1951. I’m talking drought here. This weather has put a major hurt on corn and hay supplies, driving up costs and as a reaction, farmers sold off a tremendous about of cattle for slaughter. This created a cattle glut and this glut has gone away. So what we’re left with is a dwindled down supply of cattle plus a driven up cost for feed.
We have a supply demand issue as well as a high cost issue and that translates into a higher premium for us. But it doesn’t end with just the beef we go and buy from the store… word is we’re going to start seeing McDonalds, Taco Bell and other beef serving joints raise prices – and quickly. There’s even talk about the dollar menu going away.
So my advice to you is two-fold…First, don’t stop grilling. And more importantly – if you want to profit from this, jump into iPath DJ-UBS Livestock TR Sub-Idx ETN (COW).
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By Tim Fields