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Drought and Shrinking Herds Push US Beef Prices Through the Roof

A prolonged drought has caused a shrinking of livestock herds and driven US beef prices to record highs, despite increasing demand. This is making it difficult for individuals like Mary Skinner, a 69-year-old shopper outside Grand Central Market in New York, to get her daily protein intake as ordered by her doctor.

“I used to be able to sometimes buy ribeye steak but… I’m now eating a lot more ground beef.”

According to the US Bureau of Labor Statistics, the headline rate of inflation has slowed in recent months, with a 3.7 percent reading in September year over year. However, steak prices remain high, recording an increase of 9.7 percent.

The average price for this American staple has increased by 27% in the last three years.

“It’s gotten to a point where I’ve started buying more things that can be slow-cooked, because from a price perspective, you’re getting more affordable stuff,” said another patron, who declined to share his name.

The United States has seen an escalating demand for beef, despite the prevalence of inflation in recent years. This rising demand is not easily met due to a current shortage of cattle domestically. Consequently, America’s expansive ranches and herds have been unable to keep up with the increasing interest in this commodity.

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“We’re at the lowest beef cattle numbers since the 1960s,” said Scott Brown, a specialist in farm and livestock issues at the University of Missouri.

According to the United States Department of Agriculture (USDA), herds have declined by 10% over the past five years. This decrease is primarily attributed to drought conditions in many cattle-producing areas.

Ben Brown, a USDA representative, states that this decline began in the autumn of 2020 due to reduced pasture sizes and escalating hay prices, resulting in ranchers reducing their herds significantly.

“You look at 2022, that was the highest beef cow slaughter that we’ve seen since the early 1980s,” said Ross Baldwin, a hedge strategist at AgMarket.Net.

Since then, the impact of the contraction has been exacerbated by the hundreds of cattle that perished in the unforgivingly hot and humid weather conditions during August. Nevertheless, genetic selection measures have enabled some progress to be made in remedying these losses by augmenting output levels.

“We’re more productive today. We don’t need as many beef cows today as we needed 10 years ago to generate a given level of production,” Scott Brown said.

Demand for red meat has seen an increase in recent years.

According to the United States Department of Agriculture (USDA), Americans ate, on average, 59.1 pounds or 26.8 kilograms of beef in 2022, which is a slight increase from 2021. Furthermore, since 2015, beef consumption has grown by nearly 10 percent.

As a result of this tight market, cattle prices have skyrocketed; they have more than doubled since March 2020 (up 133 percent). Breeders are incentivized by record prices and are thus parting with their heifers earlier than usual, consequently preventing the herd from growing – as noted by Baldwin.


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“We are a year out from starting to see meaningful heifer retention,” he said.

“And when you start retaining heifers, those heifers are still three years out from when the herd starts really increasing in size across the country.”

Maintaining female calves for breeding results in an even lower beef production output and higher prices in the short-term, according to David Anderson, a Livestock Market Specialist from Texas A&M University. This further complicates the issue of finding adequate pastures to accommodate larger herds.

“The Southeast part of the US has seen some dry weather, but not as dry as the rest of the country,” said Brown.

“Could beef cows move there as a another way to generate a bigger national herd? Those kinds of shifts could try to happen.”

The USDA forecasts a further decrease in beef production for 2024.

From then on, Baldwin warned, “you will see retail prices be extremely firm. And ultimately it’ll force the consumer to choose if they want to continue paying those high prices.”

 

Joe Messina

Joe Messina

All is fair in Radio! Politics, religion, prejudice, illegal immigration, legal immigration. Don't miss the "You're Not Serious" segment. We will be dealing with some of the most asinine items from the week's news. REAL and RAW!! You don't want to miss this show! The Real Side with Joe Messina. EVERY DAY - Check JoeMessina.com for stations and times.

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