With dwindling herds and an intense export demand, beef prices in the U.S. have soared to new heights and to levels that have not been seen in almost three decades. The U.S. Department of Agriculture stated that the average price of fresh beef has risen to $5.28 per pound in February, which is 5% higher compared to January prices. These prices bring beef prices to their highest point since 1987.
Small domestic supplies of cattle are a contributing factor to this intense price increase. The total cattle herd in the U.S., which is the largest beef producer in the world, is at a 63-year low. This low could be partly blamed on the rough winter we experienced this year with a blizzard also attributing to the loss of thousands killed thousands of cattle in South Dakota in October.
Commercial cow slaughter for the first quarter is on pace to be the lowest since 2008, and beef production is expected to hit a nine-year low. Many ranchers are holding onto more cattle in case pasture conditions develop, and they are continuing to rebuild their herd size.
Another strain on the U.S. beef prices is the continued demand for beef exports to countries in Asia. Beef exports were up 4% through the end of February, but imports fell about 6%. The U.S. Department of Agriculture raised its export forecast to over 2.5 billion pounds for 2014, that is a lot of meat! Some economists are saying that it will take a while for beef prices to level out and for supply to be more in line with the demand from the beef consumers.