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U.S. beef prices are skyrocketing to hit highs as country cattle stocks reach their lowest levels in over 70 years, bringing even more tension to the American grocery bill.
According to Labor Bureau data, the average price of a pound of ground beef rose to $5.79 in US cities in March, up 12.8% over the past year, the highest increase on record. The price of uncooked beef steak reached a record high at $10.98 per pound.
A long-standing drought in the American West has depleted pastures, and American ranchers steadily reduced herds, raising prices for calves and ultimately creating shortages that have raised prices for other beef products.
Labor and insurance costs are also rising, and it is not enough to offset the plunging personnel despite cows reaching heavier weights than ever before.
Donnie King, chief executive of Tyson Foods, the largest U.S. meatpacker, told analysts Monday while reporting the company’s second quarter revenue.
As a result, it’s what Kroger’s interim lead financial operator Todd Foley called beef “oversized inflation” despite the expected prices of other foods except eggs. Food prices, particularly egg prices, were a source of frustration for consumers and the focus of the Trump administration.
Persistent inflation is a key theme in Trump’s 2024 presidential election, and he is opposed to rising food prices. Meat costs increase, especially when the summer grill season begins.
Tyson said that customers have beef products have risen 8.2% in February to April alone, and that customers have beef products have beef cuts or switched to more affordable meats like chicken. The shift cost spent $181 million in Tyson’s beef business over the six months that ended in March, but the chicken sales carried meat packers to profits that exceeded analysts’ expectations.
The rising prices may have narrowed down meatpackers who have to pay more for cattle, but they were a boon for ranchers, who are narrowed down to rising costs of raising livestock.
“My neighbor, he’s trying to sell all his cows in his place next Tuesday, but that’s not because of drought,” said Carl Ray Polk Jr., president of the Texas and Southwestern Cow Razors Association. “That’s not necessarily because of his input costs, because the market is so high.”
“They use it the same way you do if it was your retirement account or any other investment. When the market is good, you can harvest a little.”
This trend could slow the long-standing process of restructuring US cattle stocks enough to lower prices at grocery stores and restaurants.
Pork said he’s growing herd 10% this year by holding the heifers he normally sells. He hopes that additional stock will help him win cash at even higher prices next year.
“I don’t know if I’m doing the right thing,” Polk said. “I’m not an economist, but all the signs are that if we maintain a substantial weather pattern, the market highs will not go away next month.
Higher cattle prices, combined with rising interest rates, could make ranchers prohibitively replenishing their ranch if they wish, Polk added. It will take 42 months to raise the beef measures. In other words, the cows born this month are not ready for the massacre until fall of 2028.
“It’s really hard to see prices fall,” said David Anderson, a livestock economist at Texas A&M University.
“(Reproduction) may be starting to happen in a way, but it’s not happening really fast yet.”
