February 15, 2024

 

US experts warn of possible record beef prices amid supply concerns

 
 


US experts are cautioning that beef prices could potentially reach record highs, as indicated by the latest data from the Consumer Price Index (CPI) report released by the US Bureau of Labour Statistics, The Hill reported.

 

The report reveals a significant increase in beef and veal prices, with ground beef up by 5.5%, beef roasts by 6.7%, and beef steaks by 10.7% compared to January 2023.

 

This warning follows closely after the American Farm Bureau Federation (AFBF) issued a caution about the possibility of record-high beef prices in the near future. The primary factor driving this price surge is the limited supply of beef.

 

According to AFBF economist Bernt Nelson, the current cattle and calves inventory in the US stands at 87.2 million, the lowest since 1951. This decrease in inventory is attributed to adverse weather conditions such as drought and the escalating costs of maintaining herds, prompting farmers to downsize their operations.

 

Unlike previous instances where supply shortages were caused by illness among cattle, the current limited supply is primarily due to weather-related challenges and increased production costs. AFBF President Zippy Duvall emphasised the impact of severe weather, high inflation, and geopolitical uncertainties on farmers and consumers alike, warning of impending effects on grocery bills.

 

Historical data analysed by CNBC shows that the last significant dip in cattle counts in 2014 resulted in record-high beef prices. Although beef prices have experienced fluctuations over the years, they have been on a steady upward trajectory since early 2021.

 

Despite the rising prices, consumer demand for beef remains resilient, with surveys indicating a willingness to pay higher prices for beef products. However, price sensitivity among consumers has also increased, with many prioritising affordability when purchasing protein.

 

While beef prices have slightly decreased since December, according to the latest CPI, wholesale prices remain higher compared to the same period in 2023. The National Cattlemen's Beef Association notes a marginal decline in wholesale prices but cautions about potential price hikes in the latter half of 2024 and into 2025.

 

In response to potential price increases, retailers are expected to implement promotions and discounts on beef products to maintain consumer demand. Despite supply challenges, beef consumption is projected to remain high, reflecting its status as one of the most consumed animal proteins in the US.

 

-      The Hill

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