There is no doubt that current inflationary patterns are digging into consumers’ pocketbooks, but other factors may begin to affect the price of your dinner. The national trend, known as the cattle cycle, could make the price of beef more expensive.
Cattle herd liquidation has been occurring since 2019 when the number of beef cows in the U.S. peaked. Since then, farmers and ranchers have been culling their breeding stock for various reasons. More recently, drought has gripped the U.S., particularly in the Plains regions, where forage availability has decreased substantially.
Last week, the U.S. Department of Agriculture (USDA) reported that just 23% of U.S. pastures are in good-to-excellent condition, leaving the rest begging for moisture, an indication that livestock pastures are struggling nationally.
The USDA recently reported that the beef cow herd fell 2% from last year to 30.4 million head. The number of heifers returning to the breeding herd declined by 3%. In all practicality, that means fewer cattle entering the food supply chain. And since cattle cycles can last for about a decade, we could continue to see higher prices for producers in the coming years.
So, what does it all mean for retail beef prices?
To put this in perspective, fed cattle supply determines wholesale and retail supplies of beef. Basic economic principles also tell us that prices will rise with less supply, all else considered equal.
However, other factors come into play. Meat substitutes such as chicken and pork seem more attractive in a time of higher prices. If overall consumer sentiment says beef is too expensive and switching to alternatives makes more sense, that can lower prices.
Beef prices have edged lower in recent months. The Wall Street Journal reported recently that retail beef prices fell 0.7% for the four-week period ending Aug. 7, compared to a year ago. However, prices remain higher from last year, and the current cattle cycle could likely cause beef prices to increase again.
Where we are likely to see resistance for beef prices to decline is foreign demand. The U.S. is exporting beef at a record pace, outperforming 2021 by 7.4% through the first six months of this year.
Consumers have yet to show more drastic signs of backing away from beef as ground beef prices remain 11.5% more expensive than last year, according to USDA data. Tyson said that beef demand remains strong despite consumers shifting to cheaper cuts.
Even as demand shifts here and there, elevated prices will likely persist, at least for the next year.