Filet mignon is cheapest in decade as coronavirus upends meat supplies
America's appetite for filet mignon and other top-shelf meat has been robust for years, with prices rising even amid record supplies. But the coronavirus flipped what, and how, Americans eat: Steakhouses are among the millions of restaurants closed nationwide under stay-at-home orders, causing a recent plunge in demand for beef tenderloin that has sent prices for prime cuts of meat to their lowest levels in 10 years.
The cost of ground beef and ribeyes "surged in the initial lockdown" as consumers rushed to grocery stores last month to stock up on ground beef and other staples ahead of quarantine measures, noted Gary Morrison, a reporter who tracks what's called the "boxed beef" industry at commodity research firm Urner Barry.
"The March 20 to April 17 period saw price increases, but they were more muted. Tenderloins, typically bought at restaurants, plummeted," Morrison added, noting price drops of nearly 40% for the choicest cuts.
The Urner Barry Choice Boxed Beef Cutout — a broad measure of wholesale prices — was priced at $206.18 "per hundredweight" in the week ending March 7. It jumped to $240.16 in the week ending March 20 and then rose further to $260.49 as of April 23, Morrison relayed.
While meat supply shifts are making for higher grocery prices, some cuts can be found at multi-year bargains. "Tenderloin (filet mignon) prices are at 10-year lows as they are not typically purchased at retail. Others include outside skirts and briskets. Most people can't or don't have tools to cook these beef items, so discounts have become the norm," Morrison said.
More recently, outbreaks of COVID-19 among workers at meat processing plants has led many food factories to temporarily suspend operations, further disrupting the U.S. food supply.
"Now, due to the pork plant closures, prices are rising again, but this time due to lack of supply," Russ Barton, a pork market reporter at Urner Barry, told CBS MoneyWatch.
A senior White House official said President Donald Trump expects to sign an executive order on Tuesday invoking the Defense Production Act for meat processing plants, CBS News' Weijia Jiang reports. The order would compel the plants to continue operating as part of the nation's critical infrastructure.
While ground beef prices rose in stores in recent weeks, they've since retreated as people find their freezers stocked and "maybe less money to spend at the grocery store," Morrison said. "Since then, however, slaughter has been impacted significantly as more plants close for positive [COVID-19] cases, to proactively protect workers, or because labor just won't show up."
Temporary hit
Plant closures and absenteeism at those plants still running also create problems for many hog farmers, who have nowhere to send their inventory for butchering.
"We do not currently have the capacity to process the amount of live hogs that are out there," Barton said. "This lack of capacity then results in a lack of pork cuts being manufactured, and therefore supply declines and prices rise."
Pork has been the hardest hit protein in terms of supply chain disruptions, according to Ben Bienvenu, an analyst at Stephens Inc.
"We estimate that roughly 20% to 25% of U.S. processing capacity has been suspended or still remains suspended, and another 30% to 35% of total industry processing capacity lies at risk" as workers at other pork processing plants have also tested positive, Bienvenu wrote Tuesday in a note to investors.
More than 20 meatpacking plants around the U.S. have closed at some point in the past two months, chopping U.S. pork production by about a quarter and reducing beef output by about 10%, according to the United Food and Commercial Workers, the union that represents 250,000 meatpacking and poultry plant worker. At least 20 meatpacking and food processing workers have died of COVID-19, according to the union's latest data.
Tyson Foods Chairman John H. Tyson on Sunday took out full-page newspaper advertisements to warn that millions of chickens, pigs and cattle would have to be euthanized because producers had nowhere to send them. "The food supply chain is breaking," the executive cautioned, days after Tyson Foods shut down its pork processing plant in Waterloo, Iowa, after multiple employees tested positive for COVID-19.
The closure is among dozens involving major meat companies, with a Smithfield Foods pork plant in South Dakota also out of commission. JBS USA temporarily shut its meatpacking plant in Green Bay, Wisconsin, on Sunday after health officials traced at least 189 coronavirus cases to the facility last week.
Urner Barry's Morrison discounted worries about consumers lining up for scarce meat. While there may be short-term disruptions or regional shortages for some items, the U.S. was producing record amounts of pork, poultry and beef until the virus hit.
"If you take away some of the export sales and food service, and add in the stock in cold storage, we should be OK after the market sorts itself out," he said. "If more and more capacity is taken off-line, there could be some longer term implications."