Beef prices hit record high as southwestern US recovers from worst dry spell in 1,200 years

• Beef prices have spiked to a record high recently, hitting $8 a pound, which tops the pandemic record of $7.90 a pound based on USDA data. This increase is largely driven by a dwindling cattle supply as feed costs continue to surge, as reported by the Financial Times.

• This surge in feed costs is a consequence of the southwest US recovering from the lowest rainfall seen over the last 1,200 years.

Historically low rainfall amounts seen in the southwest US during the 2020-2021 season have led to a 1,200-year low, which has consequently caused beef prices to climb to extremes.

Retail prices reaching $8 a pound marks a new record, surpassing the previous high set during the pandemic, according to a Financial Times analysis of Agriculture Department data.

A study published last year attributed the surging feed costs to the historically dry spell in the southwest US. While the situation has improved somewhat, hay inventories are still low, and feed costs remain prohibitively high for many cattle farmers. As a result, the national herd size has dwindled to its lowest level in 61 years.

Rising feed costs have been further intensified by the Russia-Ukraine war, causing soy, corn, and wheat prices to skyrocket. This has ultimately resulted in farmers being unable to support as many cattle, leading to scarcity and higher beef prices. Unlike hens and pigs who have multiple offspring a year, heifers only give birth to one calf every 12 months.

The long-term effects of the drought, soaring feed costs, and reduced cattle supply are expected to have a lasting impact on the market. A Louisiana rancher expressed her concerns about the future state of the country’s cattle industry, fearing the implications six and twelve months down the line.

The full article can be found on Business Insider.