China Is Shaking Up U.S. Burger Markets With Wild Swings

(Bloomberg) -- U.S. prices for a primary ingredient in hamburger meat have seen a stunning rally in recent months followed by unusually big price swings. It all points to Chinese buying -- or, the lack thereof.

American prices for 90% lean-beef trimmings have recently jumped to four-year highs, government data show. While the U.S. produces a lot of its own supply, it also competes with China for exports from Australia. In recent months, Chinese buying has been particularly fierce. The Asian country has been importing more meat as African swine fever ravages its hog herds, causing pork shortages. Last week, prices saw acute volatility amid reports of the nation slowing down its beef purchases.

Trimmings are the pieces of beef leftover after processing other cuts, and they’re typically cheaper than so-called muscle cuts, allowing burger makers to keep costs down. U.S. restaurants are starting to see the impact, with Chipotle Mexican Grill Inc., Shake Shack Inc. and other chains steeling themselves for more expensive beef next year. Without imported trim, food-service buyers are starting to dip into other non-trim beef markets, where grocery stores typically hold sway.

“There’s a major shortage of imported beef here, and it’s been a real game-changer,” Altin Kalo, analyst at Steiner Consulting Group in Manchester, New Hampshire, said by telephone. “All the burger guys that are used to that product and set up a system, they have to change it overnight.”

To contact the reporters on this story: Lydia Mulvany in Chicago at lmulvany2@bloomberg.net;Michael Hirtzer in Chicago at mhirtzer@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi, Reg Gale

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