Beef prices in the United States have been soaring due to a combination of drought, shrinking cattle herds, and the country's increasing reliance on beef imports. The challenges faced by the U.S. beef industry are further compounded by declining exports and the impact of climate change. The U.S. cattle industry is grappling with extreme drought conditions, aging producers, and a shrinking cattle herd. Ranchers have been forced to cull more heifers during recent droughts, resulting in fewer replacement heifers to rebuild the herds. The average age of agriculture producers in the U.S. is around 57, and older producers may be considering quitting due to the repeated droughts. Currently, the U.S. has the lowest cattle herd since the 1960s.
The impact of drought and shrinking herds is reflected in the soaring beef prices in the retail market. Consumers are faced with the decision of whether to continue paying the inflated prices. The volatility of livestock prices remains a concern for investors and market participants in the industry. Factors such as supply and demand, weather conditions, and global trade policies can all impact livestock prices. It is crucial for stakeholders to closely monitor market trends and be prepared for potential fluctuations.
The future of the U.S. cattle industry is uncertain, with questions arising about whether younger ranchers will come forward or if there will be more consolidation in the industry. Rebuilding the cattle herd will take at least two years, and there is currently no pipeline of replacement heifers. Additionally, the shrinking U.S. cattle herd has led to higher domestic prices for beef and veal, with the latest Consumer Price Index report showing an 8.9% increase in October compared to the previous year. The stronger U.S. dollar also makes American beef less attractive in international markets. As a result, the U.S. is importing a record amount of beef and exporting less, signaling a shift in the future of the industry.
Policy makers need to closely monitor the situation and implement measures to maintain a strong cattle production sector for the rural economy. With the need to feed 10 billion people by mid-century, beef and other livestock protein will continue to be part of the solution.
In Japan, import prices of U.S. beef have been surging, making procurement difficult for traders and dining facilities such as barbecue restaurants. The spike in prices is due to the yen's recent sharp depreciation against the dollar, a reduced supply of beef from U.S. farmers, and fierce competition for American beef with countries such as South Korea and Mexico. Japanese sectors are trying to diversify procurement sources to find cheaper foreign beef, but securing the necessary amount is proving difficult. This price surge has led Yoshinoya's parent company to explore developing new dishes using ingredients other than beef [994ea318].
Ranchers in Colorado are facing conflict with advocacy groups over the perceived environmental impacts of meat production. Robbie LeValley, a rancher in Hotchkiss, emphasizes the importance of ranching in sustaining the local environment and providing open space for wildlife. However, activists argue that large ranches and slaughterhouses contribute to environmental degradation and climate change. The Butcher Block Act, co-sponsored by Colorado U.S. Sen. Michael Bennet, aims to support small and midsize meat processing facilities and improve local and regional access to processing services. Environmental activists, on the other hand, are pushing for a ballot measure to ban slaughterhouses in Denver. The National Cattlemen's Beef Association defends beef producers, stating that they are committed to sustainable beef production and climate neutrality by 2040. Colorado State University is conducting research to determine the environmental impact of farms and ranches.
According to CattleFax, despite the challenges faced by the U.S. beef industry, continued producer profitability is forecasted with herd expansion on the horizon. The smallest beef cow inventory in the last 50 years, coupled with historically strong demand, led to the highest average fed cattle and calf prices in 2023. However, expansion will likely be delayed due to lingering drought, high input costs, limited labor availability, high interest rates, and market uncertainty. The current cattle cycle anticipates slower and more prolonged expansion, with heifer retention causing a supply decline with expected lows in fed slaughter by 2026. Higher cattle prices and reduced feeding costs will continue to improve margins for cow-calf producers for the next several years. Meteorologist Matt Makens predicts increased heat and drought-related issues for the Central and Southern Plains as La Niña's influence grows. CattleFax predicts feeder cattle and calf supplies outside of feedyards will be 1 million head smaller than 2023 at 24.1 million head. Commercial fed slaughter in 2024 is forecast to decline by 750,000 to 24.8 million head. Beef production is expected to be down another billion pounds in 2024 to total about 25.9 billion pounds. CattleFax forecasts the average 2024 fed steer price at $184/cwt. All cattle classes are expected to trade higher, and prices are expected to continue to trend upward. U.S. beef exports saw large declines in 2023, down about 13% and another 5% decline is expected in 2024, driven by smaller U.S. production and higher prices. The peak in cattle prices is expected to occur in 2025-2026, and industry profitability will continue to swing in favor of the cow-calf producer as excess feeding and packing capacity chases a declining supply of feeder cattle and calves.
Imported manufacturing beef prices in the US have surged due to supply stress caused by the US beef herd sinking to 40-year lows. Imported 90CL frozen grinding beef in the US was last week quoted at 834.6c/kg CIF, up 76c/kg or 10% since the start of the year and almost 100c/kg or 13% higher than last year. The surge in demand and price is driven by several factors, including lower meat stocks worldwide, strong demand in the US, North Asia, and Australia, and the increased value of US domestic cuts. Demand out of China remains flat. The Australian market has seen robust demand for trimmings and manufacturing beef, with better inventory levels compared to last year. Cold storage stocks in Japan and South Korea are also in better shape. US industry speculation revolves around domestic US cow slaughter levels in the second quarter and the potential for domestic lean values to change. The USDA forecasts a significant increase in US beef imports in 2024, with Australia and New Zealand expected to continue shipping more beef to the US.
Continued high prices and profitability are forecast for cattle producers as the industry enters the year with the smallest cattle inventory in 70 years. Reduced cattle numbers and beef production are expected to continue over the next three years. The peak in cattle prices is forecast to occur in 2025-2026. Heifer retention has not yet started on a nationwide level. Heifers kept as beef cow replacements were estimated at 4.86 million head, down 1% from 2023. CattleFax predicts feeder cattle and calf supplies outside of feedyards will be 1 million head smaller than 2023 at 24.1 million head. Commercial fed slaughter in 2024 is forecast to decline by 750,000 to 24.8 million head. Beef production is forecast down another billion pounds in 2024 to total about 25.9 billion pounds. The decline in production in 2024 will lead to a 1.7-pound decline in U.S. consumption of beef to 56 pounds per person. The average 2024 fed steer price is forecast at $184/cwt, up $9/cwt from 2023. All cattle classes are expected to trade higher and prices are expected to continue to trend upward. Demand for U.S. beef has remained relatively strong with South Korea, Japan, China, and Taiwan. El Niño provided improved drought conditions across Texas and much of the South and Southeast, but La Niña is expected to return, bringing increased heat and drought-related issues to the Central to Southern Plains. Hay supplies remain limited in Texas and other states. A record corn crop in 2023 has helped bring feed prices down. Increased cattle prices and reduced feeding costs will help improve margins for cow-calf producers for the next several years.
The largest wildfire in Texas history has devastated the state’s agriculture, burning over 1 million acres of land in the Panhandle, killing thousands of livestock, destroying crops, and damaging infrastructure. Over 85% of the state’s cattle population is located in the Panhandle, and the fires have left little food or water for livestock. The fires have also destroyed property fences and power lines, leaving no electricity to pump water from wells. The Texas Department of Agriculture is providing relief funds to assist farmers and ranchers affected by the wildfires. Cattle losses are estimated to be in the thousands, and some farmers may be forced to euthanize cattle due to burned hooves and udders. The fires' impact on the market is a concern, as they have wiped out pasture land and cattle feed, decreasing the ranchers' ability to feed their cows and potentially decreasing cattle supply and increasing prices. However, experts believe that the wildfires will not have a significant effect on overall cattle and beef prices nationally.
American farmers warn that the global 'sustainability' push and inflation are potential death sentences for US Agriculture. Virginia farmer John Boyd Jr. and Texas rancher Shad Sullivan warn of a potential food crisis due to globalist 'green' policies, inflation, and rising costs. There has been a one billion pound decrease in U.S. beef production over the past year, leading to thinner herds and the closure of farms. Farmers are facing foreclosure, and the USDA has done little to help. Black farmers like Boyd are facing extinction due to adverse public policy and higher input costs. The Biden administration has failed to properly address issues facing American agriculture. The U.S. cattle population has reached its lowest point since the 1970s, and there is a global push to shrink the agriculture sector. Global elites are implementing sustainability regulations that could cripple Western agriculture. Corporate agricultural interests are investing in studying insect consumption as a potential replacement for beef and pork. Farmers argue that these issues are a matter of liberty and freedom and must be stopped.
The U.S. Senate passed a resolution to repeal a Biden administration rule allowing for beef to be imported from Paraguay. The measure, introduced by Democrat Jon Tester of Montana and Republican Mike Rounds of South Dakota, passed on a bipartisan 70-25 vote. The rule, issued by the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service in November, allowed for importation of Paraguayan beef that met certain conditions. Tester and Rounds filed a Congressional Review Act resolution to reverse the rule, citing concerns about animal health standards and the risk of foot-and-mouth disease. The Biden administration opposed the resolution, stating that Paraguayan imports were low risk and overturning the rule would harm relations with Paraguay [3ffc6d5b].