Consumers have a lot of ground beef available, but that could change.
Although retail beef prices are up across the board, recent market developments in the cattle sector have affected certain beef products differently than others. With beef cow slaughter remaining well above year-ago levels, even as the cow herd and other inventory categories shrink, the amount of ground beef available for consumers has grown while the production of other beef products is declining.
From the third quarter of 2021 through the first quarter of this year, the amount of federally inspected beef production from steers and heifers is 1.1% lower than the year-ago amount, while beef produced from cow and bull slaughter is up 6.3%. The fact that both beef imports (+12.8%) and beef exports (+11.9%) have grown sharply since the third quarter of 2021 adds to the disparity.
Although it is not a perfect translation to say that cow and bull slaughter plus beef imports equal ground beef production while steer and heifer slaughter and exports are comprised of other beef products, the product mix from these sources tilts strongly in that direction.
While demand factors are also at play regarding prices for different beef products, the relative supply story is very apparent when examining the consumer price index for different beef products.
Since the beginning of 2021, the change in the CPI relative to the previous year has been lower for ground beef than that for beef steaks, beef roasts, and the CPI for all beef and veal.
While it is not uncommon for price movements among beef products to vary for short periods of time, the magnitude and duration of the differences in the CPI in recent months are unusual.
Even when accounting for the drought conditions that have plagued much of the western U.S. for quite some time, the level of beef cow slaughter has been abnormally high in recent months. Monthly data through March reports year-to-date beef cow slaughter 17.3% above 2021, even though we began the year with a smaller beef cow inventory than in 2021.
The most recent weekly data suggests that this trend is not yet showing signs of slowing. Barring a significant future revision to cattle inventory numbers, the rate of beef cow liquidation that we are currently experiencing has only occurred two other times (2011 and 1996) since the mid-1980s.
Stock up on ground beef
Elevated ground beef supplies are providing consumers a relatively affordable product at a time when the price of almost everything is increasing.
The annual change in the CPI for ground beef has trailed the overall beef and pork CPI for each of the past 12 months, but as has been repeated often in recent months, the current level of ground beef and overall beef production is unsustainable in the long term.
The longer it continues now, the tighter that beef supplies will become in the future as the production base of the industry (beef cows) continues to shrink. When that time comes, beef and cattle prices will almost certainly move higher as ground beef and overall beef availability declines.
Fill your freezers and make plans for your cattle operation accordingly.
Brown is a livestock economist with the University of Missouri. He grew up on a diversified farm in northwest Missouri.