March 2, 2022

US beef prices expected to increase due to soaring farm costs

A Rabobank report has found that US consumers will be paying more for local beef in the future as current prices do not reflect farmers' true production costs from livestock feed to fuel, Bloomberg reported.

Rabobank analysts said it is uncertain whether US consumers will continue to purchase beef if it becomes more expensive, and may turn to other proteins or lowering their overall consumption.

The report also highlighted the uncertainty of how Russia's invasion of Ukraine will affect the global beef market, as the conflict has already resulted in rising grain prices used to feed cattle.

This is in addition to a drought affecting grains production in South America, which together are contributing to cattle ranchers' soaring costs and threatening to worsen meat inflation.

Ted Schroeder, an agricultural economist at Kansas State University said costs for meat producers are rising, from land to labor and inputs.

Rabobank said US beef prices are 23% higher at retail level above the five year average in the fourth quarter that eneded in December 2021, while prices in China increased by 24%.

Data from the Bureau of Labor Statistics showed a US boneless sirloin steak in January 2022 was US$10.83 a pound, the highest in a month since data was first tracked in 1989.

The report said Australia and Brazil are expected to see production recovering in the first quarter of 2022, while cattle volumes in China and Europe are expected to contract slightly. US herd volumes are expected to remain steady.

-      Bloomberg