According to the law of supply and demand, as the supply of a product consumers want decreases and the demand remains the same, the price of that good or service will increase. Case in point are the wholesale prices for choice-grade U.S. beef. Fierce cold has limited the number of cattle than can be shipped to slaughter houses nationwide leading to a limited supply of choice-grade beef which has resulted in record price spikes.
Prices for a short hundredweight of choice-grade beef (the cut which is marbled) reached a record high of $212.05 on Thursday. The prior record was set seven months ago in May and was $211.37. According to livestock economist Ron Plain, the price spike is being driven by a drop in the supply.
The weather has produced a two-fold hit on beef supplies in the United States. It has slowed down the transportation of cattle and it has caused cattle to lose weight making each one produce a smaller quantity of meat.
Economists believe these price spikes will result in higher retail prices for beef throughout the year. The retail price for a pound of beef also hit a high at $5.41 per pound up from the previous high of $5.36 this past fall.