America's cattle herd hits smallest level since 1950s, pushing beef prices to record highs

"Beef costs have risen faster than most other items in the consumer price index, with the broad beef and veal category up 15% over the past year as of January. Uncooked ground beef reached a fresh record after soaring by the most since June 2020 in government data released Friday. The gains are a standout from the rest of the consumer grocery basket, where things have broadly improved. Chicken prices rose only by 1.1% in the past 12 months, while milk was little changed."

"But it's not that simple: The US cattle herd has shrunk in recent years to the smallest since the early 1950s because droughts and higher production costs, including elevated interest rates, have made raising the animals more expensive. While the cattle industry is cyclical, the current contraction has lasted longer than expected because there's a lot more money to be made selling animals for slaughter while very young rather than keeping them to expand herds."

"At current levels, any expansion in the US herd would at the earliest make it to the retail counter in 2028, keeping beef prices elevated for longer, said Don Close, a senior animal protein analyst at Terrain Ag. The ongoing cattle shortage has been a boon for ranchers, the so-called cow-calf producers who sell young animals to other ranchers. "In my opinion, you should be profitable right now as a cow-calf operation," said Brandi Buzzard, a rancher in Kansas."

Beef and veal prices have jumped sharply, up about 15% year-over-year, with uncooked ground beef reaching a record after its largest surge since June 2020. Other grocery items show milder changes: chicken prices rose roughly 1.1% and milk was largely unchanged. Policy moves include stepped-up competition efforts and expanded Argentinian beef import quotas. The US cattle herd has shrunk to its smallest size since the early 1950s due to droughts, higher production costs and elevated interest rates. Higher returns from selling young animals for slaughter have prolonged herd contraction and delay meaningful retail-price relief until around 2028.

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