Beef prices in the US have hit record highs, reaching $8 a pound, according to recent data from the USDA. This surge in prices is attributed to a shortage in cattle supply, resulting from the megadrought that struck the US, as reported by the Financial Times.
The extreme dry spell, which led to the lowest rainfall in the southwestern US in 1,200 years, has caused a significant decrease in cattle supplies. The scarcity of rain has also impacted inventories of hay, leading to high feed costs, making it difficult for some cattle farmers to sustain their herds.
The ongoing Russia-Ukraine war has further exacerbated the situation by driving up prices of essential feed crops like soy, corn, and wheat. This, in turn, has forced farmers to reduce their cattle population, resulting in a national herd size that has fallen to a 61-year low. Unlike hens and pigs, which can produce multiple offspring each year, cows only give birth to one calf annually, further contributing to the dwindling supply.
As a result of the drought and the high feed costs, beef prices are expected to remain high in the long term. A rancher in Louisiana expressed concerns about the future of the cattle industry, stating that it is more financially viable to sell off cattle than to continue feeding them under the current circumstances.
The impact of the drought, coupled with the rising feed costs and the reduced cattle supply, is anticipated to have lasting effects on the market. The overall outlook for the region and the country’s cattle industry remains uncertain, with questions arising about the state of the markets in the coming months and years.
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