Beef Herd Tumbles To 40-Year Low On Feed Cost Surge

The worst U.S. drought in a half century and record feed prices are spurring farmers to shrink cattle herds to the smallest in two generations, driving beef prices higher.

Beef output will slump to a nine-year low in 2013 after drought damaged pastures from Missouri to Montana, the U.S. Department of Agriculture estimates. The domestic herd is now the smallest since at least 1973, and retail prices reached a record last month, USDA data show. Cattle futures may rise 8.5 percent to an all-time high of $1.35 a pound in Chicago in the next 12 months, said Rich Nelson, the chief strategist at Allendale Inc. who has tracked the market for 15 years.

Feedlots are losing $300 a head this month fattening cattle for slaughter, after corn surged 64 percent since June 15, University of Missouri data show. JBS (JBSS3) SA, the largest beef producer, fast-food chain Wendy’s Co. (WEN) and Red Robin Gourmet Burgers Inc. are among those planning price increases. The USDA expects food inflation of as much as 4 percent in 2013, compared with an average of 3 percent since 2004. A United Nations gauge of global food costs jumped 6.2 percent in July. Read more >>

Get ready to pay more for your steak

The drought that's spreading across the Midwest is already squeezing consumers, and it's only going to get worse, as the rising cost of soybeans and corn leads to higher prices for meat, peanut butter and other staples.

The price of ground beef could rise to about $2.88 per pound this year, a 4% jump from last year, when the average price per pound was $2.77, according to data from the U.S. Bureau of Labor Statistics and the U.S. Department of Agriculture. And if you want steak, get ready to pay 25 cents more per pound for sirloin, with the average price rising to $6.47.

Meat prices had already been moving higher, even before the drought took hold. The price of sirloin steak rose more than 15% between June 2011 and June 2012, while ground beef rose more than 8% and chicken prices increased more than 6%, according to the BLS. Beef prices may react a bit more slowly to the drought as ranchers work to manage their cattle inventory. Read more >>

U.S. Cattle Herd at Lowest Since 1958 May Spur Beef-Price Surge

Image via WikipediaThe U.S. cattle herd probably shrunk to the smallest size since 1958, and the drop in beef supplies may boost prices to a record, analysts said.

Ranchers held 92.211 million head of cattle as of Jan. 1, down 1.6 percent from a year ago, according to the average estimate of seven analysts surveyed by Bloomberg News. That would be the smallest herd in 53 years, said Ron Plain, a livestock economist at the University of Missouri in Columbia. The government releases its semiannual report on the cattle herd at 3 p.m. today in Washington.

“Cattle producers are being squeezed by tough finances and a soft economy,” Plain said. “The supply is just shrinking. Beef prices are likely to be record high in 2011, and it should be a record that will last.” Read More...