Beef prices are high because supply is limited and demand is strong. On the supply side, U.S. cattle inventories have fallen the lowest levels in decades after years of herd liquidation driven by drought, high feed costs, and pandemic-related disruptions. A smaller herd means that there are fewer animals available for slaughter, but there are also fewer breeding cows to rebuild future supplies.
Weather and feed prices are two of the factors driving smaller herds today. In part of the Great Plains and Western U.S., severe droughts have reduced pasture and forage. Higher corn and soybean prices have increased feedlot costs, and ranchers have responded by selling breeding stock and reducing calving. This reduces current and future beef output, and the USDA predicts prices will peak in 2026.
On the demand side, consumer appetite for beef has stayed strong even as household budgets have tightened. When supply falls but demand holds, prices rise. The U.S. Bureau of Labor Statistics reports that food prices have risen by as much as 3% over the last year. With beef, there are higher wholesale and live cattle prices to consider, but also higher processing costs.
Gil Daigneu, the founder of Go Natural Education, discusses high beef prices.
The U.S. meatpacking sector is concentrated, and a few large processors slaughter much of the nation’s cattle. In turn, capacity constraints and labor shortages can limit processing and push prices higher. Halts on Mexican cattle imports because of the New World screwworm fly, tariffs, and changing import quotas affect how much foreign beef can be used to offset domestic shortfalls.
When will beef prices fall? The short answer is not right away. Cattle are a biological commodity with long lead times, so rebuilding the national herd and restoring beef production will take several years. The USDA’s Economic Research Service (ERS) indicates that prices could begin to moderate as more cattle reach slaughter weight in 2027.
However, the timing of a price drop depends on feed and fuel costs, weather (especially drought), processing capacity, labor availability, and trade policies. Several consecutive good years of grazing could lower producers’ costs and encourage rapid rebuilding. Imports of Canadian, Argentinian, and Australian beef could help as well.