With many U.S. cattle producers sharply cutting back on breeding or liquidating their herds completely, analysts are warning that beef prices that are already elevated may surge much higher in the coming months.
The latest report on cattle production from the U.S. Department of Agriculture (USDA) indicates that beef cattle inventory since July 2021 has fallen 2% to 98.8 million head, marking a contraction to levels not seen in many years.
Even more concerning than the overall inventory decline is the sizable increase in calf-producing females that are being sold by farmers for processing along with the steers that are normally favored for consumption as beef.
USDA livestock analyst Shayle Shagam said in a radio report last Tuesday that the agency is seeing increasingly large numbers of female stock being placed in feedlots in advance of processing.
Shagam added that female cattle in existing herds are down around 2.7% over the last year, while females in feedlots are up 3% over the same period. That means that overall supplies of cattle going to feedlots will be declining in the future. That will inevitably lead to “progressively tighter supplies” of cattle available for slaughter as 2023 approaches.
The price of ground beef reported in June was up by 9.7% over June 2021. The ongoing decrease in cattle supply is virtually certain to cause prices to go higher than previous estimates.
The USDA’s last forecast predicted that average beef steer prices would be up around 8.5% next year. That was before current conditions made the business increasingly difficult for farmers. Skyrocketing costs for production inputs and widespread drought conditions are leading to the increased sell-off of herds.
National Cattleman’s Beef Association CEO Colin Woodall said that his group expects to see beef prices continue to shoot upwards, but asks consumers to remember that cattle farmers do not set the retail price.
Woodall said the price increases will be due to higher costs. He said that farmers who are either thinning down or selling off their herds are doing so because of surging input costs. Items like feed, hay, farm diesel, and fertilizer have all seen sharp price increases and tightened supplies.
He cautioned that the process of building herds back up to previous levels even after conditions improve will take years.