US meat prices have been one of the most volatile elements driving food costs over the past couple of years. What happens to prices of beef, pork, and chicken for the rest of 2023 and into 2024 will significantly impact household budgets and business profit margins.
Overall food price inflation has moderated sharply compared with the recent past, according to both the Gro US Food Price Index and US government data. Gro’s Food Price Index shows the latest food prices for September 2023 are down 1.4% from a year ago, even though the index is still up 24% from January 2020, when food inflation began to accelerate.
Looking behind the latest tame inflation reading reveals continued volatility: Beef prices in September are up 28.6% year over year, while chicken prices are down 23.5%, according to Gro’s Food Price Index, which reflects prices based on consumption of a wide range of food items and is available as part of Gro’s Custom Price Index Application.
Going forward, meat producers are likely to limit the amount of new supplies coming onto the market, which will have varying effects on prices for different types of proteins. Producers aim to guard against further margin volatility while warding off competition for consumer dollars among the three main meat groups. A wild card: The implementation of California’s animal welfare rule, or Proposition 12, could have big implications for meat prices throughout the country.
Below, we highlight some of the major trends that will affect US protein prices in the months ahead:
Beef prices will likely break new records in 2024:
- The US cattle population is already at its lowest point since 2015. Today’s smaller breeding herd will ensure that cattle numbers will continue to shrink in 2024, likely hitting a 60-year low.
- So far this year, animals harvested for meat are down 4% from a year ago and the numbers will decline further in the second half of 2023. Keeping the pipeline tight: Cattle on feed are down 3.3% year to date.
- Beef wholesale prices have soared to records — above $300/cwt — for much of 2023 on lower meat production. Prices for the full year are on track to be 12%-15% above last year and will continue to rise in 2024.
- Retail beef prices also are setting records, driving some consumers to favor lower-cost pork and chicken.
California rule could depress pork prices in other states:
- In contrast to beef cattle, the US hog herd has shown minor expansion. Expected pork supplies could be up 3% from last year during the fourth quarter.
- The added supply has pushed average wholesale pork prices, currently around $1 per pound, down by 10% year over year, although retail prices so far haven’t followed suit.
- California’s Proposition 12, which mandates increased space for pig-rearing, will continue to disrupt pork markets nationwide and create uncertain impacts on prices into 2024.
- Producers are aggressively thinning their sow herds — which suggests a 2.5% reduction in pork available in the US next year — in case the product can’t be sold in California.
- Pork that can’t be sold in California will need to be sold in other states, and the additional supplies could depress wholesale and retail pork prices in much of the US.
Chicken prices could see further volatility:
- Broiler production defied expectations of shrinkage in the 2023 first half, instead rising by 2.5% year over year. Producers will slow production in the second half in an effort to defend margins.
- Chicken prices could be volatile into 2024 as industry crosscurrents pressure producers.
- Wholesale broiler prices have slid since the spring — down 15% since May. However, feed costs are down 20% year over year, helping to keep industry margins positive.
- US consumer demand for chicken remains healthy. But competition for the consumer’s dollar could heat up if a significant buildup in pork supplies were to occur.
- The broiler industry is keeping a close watch over the potential for cheap pork prices in 2024 — as the impact of California’s Proposition 12 plays out — which could drag down chicken prices and shrink industry margins.