U.S. Beef Prices Hit Record High... 'Meatflation' Approaches

Retail Price Exceeds $8 Per Pound

As beef prices soar to an all-time high, concerns are growing that this will drive up the cost of dining and eating out. With prolonged droughts in major cattle-producing regions and the added impact of rising inflation, the cost of beef production has surged. The market expects this upward price trend to continue for the time being.

According to the U.S. Department of Agriculture (USDA) on the 24th (local time), the retail price of beef reached about $8.18 per pound last month, marking a record high. Beef retail prices surpassed $8 for the first time in May and have been rising for five consecutive months.

Beef retail prices, which were around $6 per pound in early 2020, surged to the high $7 range due to the aftermath of the COVID-19 pandemic. Prices seemed to stabilize last year but have resumed an upward trend this year.

[Image source=AFP Yonhap News]

The rise in beef prices is attributed to factors such as a decrease in cattle inventory. U.S. livestock farms are reducing herd sizes due to worsening production conditions like drought. As inflation is reignited by factors such as instability in international oil prices, costs have increased, prompting reductions in herd sizes. U.S. consumer prices, which fell to 3.0% in June, have since risen again to 3.2% in July and recorded 3.7% in August and September.

Brian Earnest, chief economist at CoBank, a cooperative bank serving the agricultural sector in the U.S., said, "Costs are soaring across all aspects including feed, processing, transportation, and labor." The hay inventory used for cattle feed dropped to 71.9 million tons as of December last year, the lowest level since 1954. In May, inventory also plummeted by 13% compared to the same month last year.

The strong beef price trend is expected to continue for some time. Prolonged droughts in major cattle-producing areas such as Texas and Kansas are worsening cattle rearing conditions. According to the Global Livestock Market Trends report published by the USDA Foreign Agricultural Service, beef production is expected to decrease by 180 million pounds in the second half of this year. Chief economist Earnest forecasted, "Beef prices will continue to rise to record levels over the next 18 months."

The rising beef prices, which are widely used in dining out and processed meat products, are expected to impact food prices and the restaurant industry. Michael Swanson, chief agricultural economist at Wells Fargo, said, "Companies are expected to raise prices on related products such as hamburger patties to maintain profit margins," adding, "All consumers will have to pay more for all beef products for years to come."

This content was produced with the assistance of AI translation services.