Global food prices rallied 25% in 2010 and set a record in February.
Meat prices are rising in the U.S. at a faster annual rate than forecast a month ago, as increased demand for pork and beef exports erode inventories and high feed costs discourage livestock producers from expanding herds.
The retail cost of meats will increase 4.5% to 5.5% this year, including a gain of as much a 7% for pork, the most of any major food group, the USDA said in a report. Beef prices will rise as much as 5.5%, or 1% more than the government forecast on Feb. 24.
“Demand just appears to be the driving force,” says Dennis Smith, a senior account executive at Archer Financial Services Inc. in Chicago. “Domestic and export demand are both improving rather dramatically.”
U.S. exporters shipped 17% more pork to overseas buyers in January compared with a year earlier, and beef sales were up 24%, according to the most-recent USDA data. As demand increases, cattle and hog producers have been reluctant to expand herds because the cost of corn, the primary livestock feed, has jumped 94% in the past year.
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