From supermarkets to restaurants, rising meat costs are hitting Americans hard as US cattle and beef prices soar to record highs. Ground beef prices hit a record high of $6.32 a pound in August, with beef prices up 13.9% year-over-year, far outstripping overall inflation of 2.9%.
The classic combination of tight supply and strong demand is behind the surge. Cattle ranchers have slashed their beef herds to the lowest level since 1951 due to years of low prices, rising costs, and drought. CME Group live cattle futures recently rose to $243.58 per hundredweight.
Ranchers are hesitant to expand herds after a price collapse in 2014. Brett Kenzy, a fourth-generation rancher in South Dakota, says there is a lack of confidence in the market. Narciso Perez, a cattle broker in New Mexico, notes that high prices are incentivizing producers to sell heifers to pay off debts rather than breed them.
Even if ranchers decided to expand today, it could take up to four years to produce slaughter-ready cattle. Beef production has also dipped due to the US closing the Mexican border to cattle imports to prevent the spread of New World screwworm.
Consumer preferences are also driving prices higher, with demand shifting to higher quality grades like prime and upper choice. The US imports 16% of its beef, and a 50% tariff on Brazilian beef trimmings, which make up much of ground beef, adds to costs. Restaurant owners like Leonard Botello of Truth BBQ in Texas have seen brisket prices rise from $2.50 to $8 a pound, nearly doubling menu prices.
Despite higher prices, diners remain undeterred, with beef dishes still top sellers. However, the cattle shortage is eating into profits of major meat processors like Tyson, JBS, and Cargill.
