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Beef prices rose to record highs on Tuesday, a bad sign for shoppers planning summer barbecues.
Live cattle futures traded on CME Group settled at $2.51 per pound Tuesday, the highest since the 1960s, according to FactSet data. Each contract covers 40,000 pounds of live cattle, typically around 30 to 35 cattle that are finished and ready for slaughter.
Contracts have soared more than 25% in the past 12 months as ranchers face rising costs and shrinking herd sizes. Cattle prices fell slightly in Wednesday trading.
Cattle slaughter is expected to fall to 2.2 million head in March from 2.5 million head in the same period last year, according to Barclays estimates and U.S. Department of Agriculture data. Beef production fell by 300,000 pounds over the same period to 1.9 million pounds, according to the bank’s research.
The U.S. cattle herd is now the smallest since the 1950s, when the U.S. population was half its current size.
Due to limited supply, the average retail price of ground hamburger meat rose to about $6.70 per pound in March, according to the Consumer Price Index, which is tracked by the Bureau of Labor Statistics. This was an increase of approximately 12% compared to the same month last year.
Ground beef prices reached an all-time high earlier this year dating back to 1984, according to federal data.
Bank of America’s Sara Senatore said in a note to clients on Wednesday that beef has not been able to keep up with the recent drop in egg and chicken prices following last year’s bird flu outbreak.
However, Barclays analyst Benjamin Theurer told clients that consumer demand for beef remains stable despite lower production levels and upward pressure on prices.
Mr. Senatore said restaurants, especially chains like the following, could see same-store sales growth slow due to beef inflation: mcdonalds, chipotle pepper, shake shack and cracker barrel High exposure to beef.
Ranchers and slaughterhouses are already grappling with rising costs in other areas, such as fertilizer and fuel, from the U.S.-Iran war.
Nearly 60% of U.S. farmers said their finances are hurting because of rising prices, according to a survey released Tuesday by the American Farm Bureau Federation. Many farmers polled said they could not afford all the fertilizer their fields needed.
Consumers cooking burgers on Memorial Day will also feel sticker shock in other grocery store aisles. Tomato prices soared about 15% in March to levels not seen in more than eight years, threatening prices for BLTs and salads.
