Why beef prices have been rising this fall
Whatever we learn about inflation this week, one thing we do know is that beef prices have been going up. Cattle futures rose almost 10% between the end of August and the end of October. We can thank the usual suspects: supply and demand.
Over the last few months, it’s been particularly dry in cattle country.
“The western Dakotas, a large portion of Kansas and Nebraska, and most of Oklahoma,” said Naomi Blohm, senior market advisor at Total Farm Marketing.
She said drought conditions affect cattle production because cows like to spend their waking hours grazing. And droughts mean less hay.
“So when you are in a situation like that, as a rancher, you’re going to limit the number of herd that you have, because there’s only so much feed available,” Blohm said.
Smaller herd sizes aren’t the only factor pushing up beef prices.
Glynn Tonsor, a professor at Kansas State University, said production costs have been rising, too.
“Whether it is feed costs, labor costs, land, rent. Almost all of those entries are going to be higher than they were, certainly before the pandemic,” he said.
And while beef supplies have been dwindling, demand has stayed strong.
Tonsor surveys consumers about their meat consumption and he said while people are trading down — buying more hamburger meat instead of steak, for instance — they’re still buying beef.
“We’ve actually seen a small growth since February of 2020 in that. That’s very consistent with the public wanting to keep meat in their diet, and making some adjustments to pull that off,” he said.
There are a couple factors that could keep a lid on prices.
Naomi Blohm at Total Farm Marketing said cattle imports are up, from countries including Australia, Brazil and Uruguay.
And the weather could always improve.
“If we have good rains over the winter, if we have good snowfall over the winter, and pasture conditions improve, then we can start to see the U.S. ranchers want to, and have confidence to increase herd size,” she said.
But even if that happens, Blohm said it would take years for any new meat to hit the market.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
