Beef prices could rise to new highs as droughts and inflation drive U.S. cattle inventory down to a 73-year low, a farm advocacy group found in an analysis of federal data.
The American Farm Bureau Federation reported Tuesday that the U.S. had 87.2 million cattle and calves last month, down 2% from a year ago and from nearly 95 million in 2020. It’s the lowest tally the U.S. Department of Agriculture has recorded since 1951, the group noted.
According to the federation, “severe droughts” and “the rising costs of supplies” have driven ranchers to trim herds and sell off female breeding cows.
“The latest cattle numbers are a stark reminder of the challenges facing America’s farmers and ranchers,” said Zippy Duvall, the federation’s president. “Severe weather, high inflation and geopolitical uncertainty are taking a toll on farmers across the country, and families will see the effects in their grocery bills.”
While the supply chain has enough cattle to stabilize prices temporarily, federation economists said increased competition may lead to higher costs in the second half of 2024 and “record high beef prices” heading into 2025.
The USDA did not respond immediately to a request for comment.
The report comes as market researcher CattleFax projects the U.S. will produce about 25.9 billion pounds of beef this year. That’s down by 1 billion pounds from last year and 2.3 billion pounds since 2022.
Beef Magazine reported Friday that Mike Murphy, CattleFax’s chief operating officer, predicts the average price for fattened cattle will rise to $184 per hundredweight this year, up $9 per hundredweight from last year.
On Tuesday, industry insiders said beef producers have struggled to process enough cows to satisfy a growing consumer taste for beef that started during pandemic quarantines.
“Many of our members have incurred losses in beef production for several quarters now,” said Sarah Little, a spokesperson for the North American Meat Institute, a trade group of meat processing companies. “Packers know this is part of the cattle market cycle … and they will do all they can to compete and remain viable.”
The trend has already impacted Texas, the nation’s top beef-producing state.
Jason Nelson, co-founder of PrepperBeef.com in Waco, said cattle prices have risen by 40% over the past six months as eight out of 14 processing plants in his area shut down. His company of 20 employees processes 38,400 pounds of beef monthly to sell online in freeze-dried bags.
“You’ve had a lot of people from California move into the region, which is sucking up the water,” Mr. Nelson told The Washington Times. “People are selling [their cows] younger because there’s no grass to eat. So it makes sense for a rancher to send a cow out at the 800-pound mark instead of the 1,200-pound mark.”
PrepperBeef.com relies on cattle supplied by a ranch in Crawford, not far from former President George W. Bush’s Prairie Chapel Ranch.
Mr. Nelson noted that developers are building a 1,200-home subdivision to accommodate new residents in that area.
“Our primary cattle rancher there is panicked because each of the homes will have its own well,” he added.