Inflation-battered grocery shoppers are about to get a much-needed drop in meat prices, thanks to a boom in the renewable fuel industry.
Processing soybeans to produce sustainable fuels is becoming increasingly common, and a by-product called soybean meal is produced in large quantities.
As a result, soybean meal, the main ingredient in animal feed, has become more readily available to meat producers and therefore cheaper. bloomberg.
Bloomberg reports that for every ton of oil used to process soybeans, four tons of soybean meal are produced.
The cost of that feed accounts for about 60% of the cost of raising the animal before it goes to the slaughterhouse.
So while these cost savings are expected to directly benefit farmers and trickle down to grocery stores, experts say it could take months or even years for savings to be realized. states.
“Meals will be priced to disappear,” Gordon Denny, an agricultural consultant and former procurement director at produce giant Bunge Global SA, told Bloomberg.
As a result, “all forms of protein will become a little cheaper.”
If the renewable fuel industry continues to thrive, the United States will produce about 30% more soybean meal in 2026 than in 2022.
This is “pretty bearish for soybean meal,” Stevens analyst Ben Bienvenu told Bloomberg.
Lower meat prices will no doubt be welcomed by Americans who have been weighed down by persistently high inflation as borrowing costs hit a 22-year high as the Federal Reserve seeks to accelerate the economic slowdown. It will be a necessary relief.
As inflation increased, so did the price of meat. The retail price of chicken breast in March 2020 was less than $3 per pound, according to U.S. Department of Agriculture data. By September 2022, prices had soared nearly 60% to $4.75 per pound.
For reference, Americans eat about 100 pounds of chicken a year, according to Bloomberg, making the price hikes even more noticeable for cash-strapped shoppers.
Brian Earnest, lead protein industry analyst at Corbank, told Bloomberg that if meat prices start to fall at the consumer level, meat prices could come down to buy-one-get-one offers. He said it was expensive.
“This year we will see even more of this promotional activity,” Ernest said.
Inflation rose by a stronger-than-expected 3.4% in December, according to the latest Consumer Price Index, which tracks changes in the cost of everyday goods and services.
Although this number is significantly lower than the 6.5% rate of increase in December 2022, there is still some way to go before inflation is contained to the Fed’s 2% target, a rate that the U.S. economy has been in for more than a decade. It’s a level I’ve never experienced before.
The Fed attributed more than half of the 3.4% rise to rising housing costs, but indexes for meat, poultry, fish and eggs also rose slightly on a monthly basis.
