U.S. beef prices stay elevated as tight cattle supply raises summer cookout costs

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U.S. beef prices stay elevated

Highlights

U.S. summer barbecue costs for 10 people will rise 2.4% to $161 due to tight cattle supply and a 14% jump in hamburger beef prices.
Average retail price for one pound of lean and extra lean ground beef reached a record $8.62 in May, over 12% higher year-on-year according to U.S. Bureau of Labor Statistics.
Washington blocks Mexican cattle imports while encouraging Argentine beef imports; consumers increasingly substitute chicken and pork as prices for two pounds of ground beef climb 5.5% to $14.06.

Supply pressures and holiday food costs

As reported by Reuters, beef prices are staying high as drought, wildfire damage and a reduced cattle herd limit short-term supply in the U.S. Wells Fargo Agri-Food Institute estimates the cost of a summer barbecue for 10 people will rise 2.4% from last year to $161, with hamburger beef prices up 14%.

Michael Swanson, chief agricultural economist at Wells Fargo, says there is no meaningful way to quickly increase domestic supply. The average retail price of one pound of lean and extra lean ground beef reaches a record $8.62 in May, more than 12% above a year earlier, according to U.S. Bureau of Labor Statistics data.

President Donald Trump has encouraged low-tariff imports of Argentine beef to help cool prices, a move that angers U.S. ranchers. Washington also continues to block Mexican cattle imports because of the spread of the New World screwworm parasite in Mexico, removing a supply channel that U.S. producers previously used for feeding and slaughter.

Rancher decisions and protein substitution

Economists say prices are likely to remain high because ranchers continue sending cattle to slaughter instead of holding back animals for breeding. Once producers decide to retain female heifers to rebuild herds, it takes at least two years before those animals are processed into beef, extending the supply squeeze.

Brenda Masek, a cattle producer in Purdum, Nebraska, says recent rains have helped pasture conditions but she is not planning to expand her herd further. She says many producers still may need to cull older cows because of lingering dryness and limited hay supplies.

Some consumers are responding by switching to cheaper proteins. An American Farm Bureau Federation survey shows two pounds of ground beef cost 5.5% more than a year earlier at $14.06, while two pounds of chicken breasts cost $8.06 and three pounds of pork chops cost $14.79, giving shoppers lower-cost alternatives for July 4 meals.

In our earlier coverage of July 4 price pressures, we noted that this holiday season was shaping up as one of the most expensive in years as food and fuel costs stayed elevated. We highlighted how inflation and shocks in energy markets were squeezing household budgets, while higher beef prices were feeding through to staples such as hot dogs and raising concerns about continued volatility.

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