Beef prices have hit record highs, with ground beef reaching $5.98 per pound in May, marking a 16% jump from the previous year.
Despite the steep prices, demand for beef continues to rise. According to Mark Gardiner, a fourth-generation rancher at Gardiner Angus Ranch in Kansas, beef has established itself as the preferred protein globally.
The surge in prices can be attributed to a combination of factors, including the smallest U.S. cattle herd since 1951.
The U.S. Department of Agriculture (USDA) reports that ranchers have reduced their herds due to inflation, rising cattle care costs, and drought conditions across the Great Plains. These factors have driven up feed costs, compounding the financial pressures on producers.
Derrell Peel, a livestock marketing expert at Oklahoma State University, explains that while high prices have given ranchers more leverage in the market, rebuilding herd sizes takes time.
The ongoing low cattle supply is tightening the market even further, leading to higher prices. As Peel puts it, “Cattle production is a slow process, and turning this around quickly isn’t realistic.”
Cortney Cowley, a senior economist at the Federal Reserve Bank of Kansas City, points out that producers are weighing high input costs and favorable cattle prices when deciding whether to sell.
Given the strong prices, it’s hard for ranchers to hold back cattle from sale, despite the potential benefits of rebuilding herds.
Additionally, beef production has dropped since April, pushing prices even higher. “Beef prices typically rise ahead of Memorial Day grilling season, but production decreases have made the situation worse,” said Peel.
With fewer cattle available, meatpackers are paying more for livestock, driving up wholesale prices. This cost increase ultimately reaches consumers. The U.S. also faces a beef trade deficit, importing more beef than it exports, which further contributes to higher prices.
Tariffs on beef imports could exacerbate the price hike, as disruptions in export markets could cause delays and raise costs. While these effects aren’t yet felt directly, Peel anticipates they will build over time.
In the meantime, beef producers are benefiting from high prices, which are a welcome shift after the challenges posed by the COVID-19 pandemic, when cattle could not be processed due to plant shutdowns.
Despite concerns about economic downturns, Gardiner remains optimistic, stating, “It’s never been better in the beef industry. We have more opportunity today than at any time in the history of American beef production.”
As beef prices stay elevated, the future of the industry remains uncertain, but for now, producers are navigating the surge with a mix of caution and optimism.
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