US beef will remain expensive for years

Happy Friday and welcome to a depressing look at the US beef debacle! 🐮

US Beef Will Remain Expensive For Years

In the messy, political discussion surrounding U.S. grocery prices, emotions run high. Lot’s of people, the media included, run to the expedient and easy answer to blame tariffs, but the real reason for the high American beef price is easier to understand but harder to manage.

Scarcity.

What we are seeing in American retail beef prices is a market behaving exactly as an intact market should when supply collapses and demand holds. The drivers of this collapse are biological, financial and demographic which will lock in prices for years.

On January 1 2025 the U.S. cattle herd fell to an estimated 86.7 million head, a 74 year low. At the same time the US imported a record volume of beef: around 2 million tones. The increased imports help to supply product, but not correct the structural domestic shortfall.

The collapse in breeding stock has arisen out of necessity. Between 2021 and 2023 severe drought and high feed costs forced producers to liquidate much of their herds. This solves immediate cash requirements, but removed a generation of cattle from the market.

Unlike software or manufacturing, beef production follows a biological timetable. A timeline that takes years to go from retained heifer to market supply. This biological lag means that meaningful, market-wide supply is unlikely before late 2027 or 2028.

The high price signal that ranchers are receiving are already doing the work of market coordination. Feeder cattle prices have jumped as buyers compete for supply. These high prices create an irresistible financial pressure for producers to retain replacement heifers to rebuild herds, but there are bigger, more challenging problems.

Rebuilding the herd faces significant headwinds. Replacement heifer retention fell to 17.2% of the inventory in 2024. Ranchers are approaching retirement age and there are persistent, insurmountable financial barriers to entry for new operators. High input costs, feed, fuel, labour etc are still compressing margins and raise the opportunity cost for holding non-productive animals for any significant period of time.

Then there are the policy measures. Tariffs, market intervention and increasing imports from Argentina erode the incentive to rebuild. The market needs prices high enough to offset the historic cost of inflation and the cost of foregone immediate revenue by retaining heifers. Any attempt by the Trump administration to lower those prices for consumers now risk prolonging scarcity and keeping retail beef prices elevated for years.

Taken together these forces slow herd recovery and keep production constrained.

All this without even mentioning the conditions that started the supply issue in the first place, environmental instability, farmland loss and water availability.

Given the difficult position that the US beef market is in, we can expect elevated beef prices to persist.

The US herd rebuilding timetable is set by biology, finance and demographics, all operating on multi-year cycles.

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