Retail beef prices in some areas have seen record prices, primarily due to concerns over supply rationing. Beef production last week was estimated at 405.2 million pounds, up 10% from the previous week. Although all plants are operating again, production is not operating at 100%, and is down 25% from last year. This decrease in production has led to increased beef prices. Choice cutout prices were $434.32 on May 15, up 59% over the end of April 2020 and 97% over last year. Consumers began seeing some of that inflation at the retail case by the end of April. Beef retail values in April average $6.44, up 6.5% over March and up 5.6% over April 2019. Retail values for May have not yet been reported and will likely see even larger increases. Tyson Foods reduced prices for ground beef, roasts and other beef products by as much as 30% for grocery stores and restaurants last week “to help keep beef on family tables”. The reduction is a temporary cut.
It will take more time before packers are operating at full capacity. Meanwhile cattle feeders will continue to find it challenging to sell market-ready cattle on a timely basis. Given the cuts to May slaughter projects the August 1 inventory of cattle on feed 120 days or longer will continue to grow. Cattle slaughter is improving slightly as packers have reopened. However, it will still take some months (likely the end of summer) before the backlog of market ready steer and heifers is reduced. Packers will want to increase production as soon as possible though given the record margins currently offered by the market. Competition by packers will be light until front-end cattle supply is lowered, but there should be greater competition among packers by September.
Written by: Dr. Brenda Boetel, UW Madison Division of Extension Livestock Economist