Source: MEATINGPLACE, 9/23/11

USDA Friday raised its forecast for beef prices in 2011 but left its outlook for overall food inflation unchanged.

Beef prices are now projected to rise 8 percent to 9 percent this year, up from USDA’s previous forecast for a 7 percent to 8 percent increase. USDA’s Economic Research Service also boosted its overall meat price projection for the year by half a percentage point to a range of 6.5 percent to 7.5 percent.

“Drought conditions in the South, along with rising feed prices and strong international demand, have led ERS to revise its 2011 forecast upward,” USDA said in the report.

The forecast for pork prices was unchanged at up 6.5 percent to 7.5 percent, and the outlook for poultry prices was left at up 2.5 percent to 3.5 percent in the monthly report.

Overall food inflation was seen up 3 percent to 4 percent, also unchanged from the prior month. For 2012, USDA expects food price inflation to abate from 2011 levels but still projects price increases to be slightly above the historical average for the past two decades.

“While many inflationary pressures that drove prices up in 2011 are not expected to intensify and may even decrease in 2012, retailers have been slow to pass on cost increases to date. Price levels in 2012 will hinge significantly on several macroeconomic factors such as weather conditions, fuel prices and the value of the U.S. dollar (an indicator of global demand),” the report said.

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