US food prices continue to rise overall, but one exception has been beef. Wholesale prices for beef primal cuts have barely budged since the spring, and plentiful beef supplies in the near term should put a lid on prices into the start of 2023, according to a Gro analysis.
Inventories of beef are certainly strong. Cold storage quantities, at record levels, are running 15% above the 10-year average for July (and 27% higher than a year ago). Those plentiful supplies are the result of ranchers shrinking their herds at an unusually fast clip, delivering more beef to markets and exerting downward pressure on prices for now.
The accelerated herd shrinkage comes as ranchers liquidate their inventories in response to dried up pasture in drought-hit Western states and the highest feed costs in years. Gro's Beef Cattle Feed Index, part of the Gro Custom Price Index application, shows cattle feed costs have come down from their peak in April as grain costs have dropped, but they are still up 32% in September from a year ago.
Beef prices eased this past winter from their COVID-recovery highs after ranchers prepared more cattle for slaughter late last year, as Gro wrote about here.
The US beef cattle population, at 56.6 million head, is down 2% from a year ago, and is 12% lower than its most recent peak in 2019. Although the herd size normally rises and falls in cycles, the latest downturn is 12% faster than normal.
View a display from the Gro Portal with an overview of the US beef herd, including stocks, prices, cattle on feed and cold storage quantities, and slaughter rates.
Gro’s analysis of beef price trends sought to determine how long the US cattle herd would continue to shrink at an accelerated pace and thereby build storage inventories.
But even as herd liquidation exerts downward price pressure, other factors are working to push prices higher, with the result that beef prices have largely flatlined since spring.
The balance of forces that have kept beef prices steady in recent months, despite overall food price inflation, could be upset at any point by external forces. But given the continuing downward pressure on prices from heightened beef supplies on the one hand and strong consumer and export demand, as well as broad inflationary forces on the other, beef prices are likely to remain subject to competing pressures at least into next year.