Beef prices have surged as a result of the drought in the U.S. southern plains, which have "severely reduced" the cattle herd, said Stephen Nicholson, a strategist at agribusiness bank Rabobank.
Beef cattle operations that depend on rainfall to produce feed for their herds are susceptible to drought. During dry periods when forage production and availability for cattle feed decline, producers often need to purchase additional feed, or decrease the size of their herds — leading to higher costs.
Feeder cattle futures traded on the Chicago Mercantile Exchange rose 16% to $2.59 per pound year-to-date, data from FactSet showed. Feeder cattle are young cattle that are mature enough to be fattened for slaughter.
Rabobank and the U.K.'s Agriculture and Horticulture Development Board both expect that the overall decline in global beef production will keep prices elevated in 2025.
According to a recent RaboResearch report, herd contraction in the world’s four largest beef-producing countries is going to lead to the first global beef supply reductions since the Covid-19 pandemic and will alter trade flows. Brazil and the U.S. are likely to lead beef production declines in 2025, but reductions in China, Europe and New Zealand are also likely.
Total Production Change compared to the 2019-2023 average...
RaboResearch reported that an estimated 1% reduction in the global supply versus the prior year is possible.
