According to the Department of Agriculture, beef prices skyrocketed more than 10 percent last year, and are expected to soar even more.
John Nalivka, owner of consulting firm Sterling Marketing, estimates prices could rise as much as another 10% — more than double the inflation rate for all food.
We warned readers in August of last year that beef prices would rise as a result of the severe drought in the state of Texas, and many southern US states.
Last July, nearly half of all Texas counties were under a burn ban, forcing cattle owners to thin out their herds early and place cattle in feedlots where livestock are fattened for market before slaughter.
The drought applied enormous stress to the US beef production system, while US exports were at all-time record levels.
The USDA Cattle Inventory report released last summer confirmed the US cattle herd would continue to decline over the next two to three years, reducing beef production and putting upwards pressure on both cattle and beef prices.
According to the general manager of a livestock auction house, many ranchers shipped out every cow they owned last summer. Some of the smaller ranchers shipped whole herds.
The bigger ranches started selling the older cows first, then the middle aged cows, and finally the young cows. It will take ranchers years to rebuild their cow herds because of last summer’s forced sell-off.
Kevin Good, a senior analyst at research firm CattleFax notes the ranchers thinned their herds because of the soaring price of corn, rising property costs and increased competition for land with corn, soybeans and other crops.
In addition to the soaring price of corn, U.S. beef exports jumped over 20 percent last year on surging demand from Canada, Japan, South Korea and Hong Kong.
The combination of low supplies and strong foreign demand lifted cattle prices despite falling U.S. consumption, Nalivka says. Live cattle prices hit a record $1.26 a pound last week, up 20% the past year.