Beef Price Dynamics

Beef prices remain at all-time unprecedented highs, putting the market in unchartered territory. While the cattle industry is now in its seventh year of contraction, there are early signs that the cycle may be starting to slow. Barnt Nelson, economist with the American Farm Bureau Federation-

“You know, right now, the current environment with cattle prices is good, but as we always say, you know, the cure for high prices is high prices. So how long can this be sustained? We have high cattle prices, and beef is starting to catch up. So far, consumer demand has remained strong, and all indications are showing that it's still strong. But we look at this, you know, the all fresh beef price the ERS release came in at $8.63 a pound. We've got just about everything across the board is rising in prices. When we talk about

beef sirloin and ground beef prices are up.”

But the question is, how long will consumers keep paying the higher prices? The Choice select spread offers insight into their willingness to pay for higher quality beef widened out.

“It's narrowed a little bit, and yet it's widened out again, and when that's why that tells us that our consumer is still willing to pay that so when we went from a low of, you know, six or $7 is difference between that price here just about a month ago, now we're back up to $14 in that spread again. And while this isn't a massive difference, that's enough to be a little bit of an indicator that our consumers are still buying beef.”

AFBF’s Bernt Nelson.