Beef prices soar as cattle herds dwindle
Grocery stores and fast-food chains worry that costs will keep climbing.
The beef is disappearing.
Americans are eating less beef, and the size of the cattle herd has fallen to its smallest since 1952. Beef prices are rising, and fast-food chains and other companies are worried about increasing materials costs.
Beef consumption has fallen for six years straight, Bloomberg reports. There are a number of reasons, including the "pink slime" controversy over treated meat. Americans are also more concerned about their health. And beef has become very expensive -- ground beef hit an average of $3.02 a pound in March, the highest since 1984.
The Livestock Marketing Information Center predicts record beef prices this year, Bloomberg reports. We could see those higher costs at stores and at restaurants.
The main reason beef prices are climbing is that there are fewer cows -- only 90.77 million head at the beginning of this year, a decline of 2.1% from the year before, Bloomberg reports. Drought across America has forced farmers to keep herds low.
Don't expect many changes, either. The U.S. Department of Agriculture forecasts beef stocks to decline further in 2013, though beef imports may rise slightly to help meet the shortage.
These higher prices are weighing heavily on the minds of executives at fast-food companies and grocery stores. Costco (COST) said it's dealing with rising beef prices this year, Bloomberg reports. Wendy's (WEN) and McDonald's (MCD) are feeling the pain as well.
The result? America will continue to move away from beef to pork, chicken and other options. Prices are simply getting too high. A juicy steak will become an indulgence, a treat that we can't afford too often. Tofu, anyone?
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Makes total sense. If demand is down, and herd sizes are down, shouldn't the price stay the same?
There's always a foggy explanation as to why the consumer gets the shaft, let's hear it.
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The Dow is off slightly on the day, after falling nearly 130 points at the open. Decent reports on jobless claims and new-home sales helped.
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