Retail beef prices remain high

Consumers can expect higher beef prices at grocery stores despite a recent dip after the typical seasonal peak around Memorial Day, according to a Texas A&M AgriLife Extension Service expert.

David Anderson, Ph.D., AgriLife Extension economist, Bryan-College Station, said retail beef prices remain above the five-year average, as supply and demand factors continue to contribute to higher-than-normal prices.

Retail beef prices are lower than this time last year at the height of the pandemic, when panic buying and packing plant closures drove prices upward, Anderson said.

Anderson said choice retail beef prices were $6.96 per pound compared to $7.59 per pound a year ago during the pandemic. While prices are lower than a year ago, they have been on the rise this year. Choice average beef prices have increased from $6.41 to $6.96 per pound since the first of the year..

The recent price changes for beef are consistent with historic seasonal peaks and valleys, but prices remain above the five-year average of $5.82 per pound. Anderson said he expects market conditions to keep prices up.

Cuts like rib-eye steaks skyrocketed this spring through Memorial Day weekend, which typically marks the kickoff to grilling season and the annual seasonal peak for retail beef prices, Anderson said. Rib-eye cuts were $13.18 per pound wholesale heading into the holiday and settled at $10.36 per pound this week.   

“We’re seeing tighter supplies across the board on all proteins as there continues to be strong demand here at home and booming exports,” he said. “Beef cuts calmed down a little after the typical season price spike around Memorial Day, but it looks like higher prices at grocery stores are here for the foreseeable future.”

Extraordinary demand for retail beef

Anderson said the economic recovery continues to drive strong demand for beef. Restaurant demand for beef has put increasing pressure on supplies – especially higher-value cuts like rib-eye and tenderloin – as people look for opportunities to dine out.

Demand for beef at grocery stores has not waned as restaurant capacities rise, he said.

“There is extraordinary demand right now,” Anderson said. “We’re coming out of the pandemic, and people want to get out, and restaurants are meeting that pent up demand. But purchases at grocery stores hasn’t slacked off, even with the reopening. The combination is fueling higher retail prices as a result.”

But higher costs to produce beef and move it through the supply chain to grocers and restaurants are also feeding higher costs for consumers, he said. The same market factors are affecting other proteins like chicken and pork.  

Feed, fuel and labor costs are all higher on the supply end as lower unemployment and economic growth push demand higher, Anderson said.

“I would argue that the problem is still a lingering bottleneck in terms of a shrinking herd, packing capacity, trucking capacity to move product around the country, and all the moving parts that get us from the farm to the plate,” he said. “Part of that is the turmoil we’ve experienced during the pandemic and the volatility it introduced to the market. I think this is the latest round of volatility that we’re working through after a year and a half.”

Calf prices, high production costs

At the supply end of the chain, beef producers have seen calf prices rise some, especially in certain weight classes, but prices remain below the five-year average.

Anderson said high feed prices – mainly corn and soybean meal – have stymied price gains at local sale barns across the state. Feedlots are willing to pay more per pound for higher weight calves – 700-800 pounds – that do not require as much feed to finish out, while calves 400-600 pounds or lower are not fetching top dollar.

“Gains from grass cost less than corn right now, and so feedlots are willing to pay a little bit more for heavier calves,” he said.

The fact that most cow-calf operations have better grazing conditions than a month ago has also settled the market some as well, Anderson said. Producers were culling their herds deep and selling calves early when they were looking toward severe drought and a hotter, drier summer forecasted ahead.

“A couple months ago, there were no buyers and a lot of sellers, and prices went down,” he said. “Now there’s more grass, so nobody is under pressure to sell and there are more buyers looking to restock or take advantage of good grazing.”

The rainfall that reduced drought levels across Texas likely steadied the market a bit for producers. But Anderson said contraction of the Texas beef cattle herd was expected to continue due to feed costs, continued threat of drought and the fall seasonal dip in demand that triggers reduced beef production.

“We are producing a lot of beef, but we could see less production year over year,” he said. “I think we’ll continue to see retail prices come down from peaks overall, but not below last year or even 2019. Consumers will get some relief, but it’s hard to say that we’ll see overall prices decline.”

AgriLife Extension district reporters compiled the following summaries:

CENTRAL

Temperatures and humidity were above normal. Rivers and streams were high and running muddy. Some corn crops were showing signs of fertilizer shortages, likely attributed to a combination of rapid growth, some soil saturation stresses and denitrification. Cotton stands were variable and recovering from soil saturation and were now reaching first bloom. A large second hay cutting was near completion with producers racing to bale forages before the next rainfall. Winter wheat harvest was finally nearing completion. Unfortunately, the crop was weathered somewhat and will likely be downgraded. Sorghum looked excellent and was now at coloring stage. Field checks were showing very few pests with some aphids and an occasional stinkbug. Producers were also finding the occasional fall armyworm. Livestock were doing well, and body conditions were good on pasture. A slightly cooler, wetter weather trend was in the forecast. 

ROLLING PLAINS

Another round of storms delivered 2-3 inches of rainfall to Baylor County, while Motley County reported 4 inches in two days and many fields under water. Other areas reported scattered showers. Wheat harvest was still way behind with plenty of wet spots in fields, downed wheat and weed issues. Cotton producers were also trying to catch up with only a quarter of the crop planted so far in wetter areas. Producers were busy harvesting wheat and planting cotton in drier areas. Knox County reported cotton plantings were complete. Coastal Bermuda grass pastures looked good, with a second cutting nearing harvest time. Corn and sorghum looked good, with corn in several different stages due to delayed plantings. Sorghum was mostly in the boot stage. Pastures and rangelands looked good following good rain events. Cattle were in good condition, and calves were making good gains. Most fall-born calves were weaned and sold.

COASTAL BEND

Weather was hot, humid and dry with little to no rain reported. Crops continued to progress, and corn and sorghum were drying down. Small amounts of grain sorghum were harvested, but there was a reluctance to apply spray herbicides due to rain in the forecast. Cotton was setting bolls, and some stunted cotton recovered but was way behind. Rice was starting to head out. Rangelands and pastures were lush, and livestock were in good condition. Hay was cut and baled with good yields reported.

EAST

Hay production was in full swing. Producers worked fast to cut and bale in between pop-up showers. Sabine County reported producers were finally able to get hay harvesting equipment into bottomlands. Smith County reported a need for more rainfall. Pasture and rangeland conditions were fair to excellent. Subsoil and topsoil conditions were adequate. Temperatures and humidity were on the rise. Livestock were in fair to good condition. Fly populations were outrageous in Houston County, with both house flies and horn flies causing problems. Producers reported the armyworm invasion had begun. Most counties in the district were having issues with armyworms. Wild pig control continued.   

SOUTH PLAINS

Soil moisture levels were poor to fair, but rain was in the forecast. Cotton conditions ranged from seed in the ground to the squaring stage. This wide crop progress range was reflective of weather and soil conditions. Peanuts were generally doing well with many fields beginning to bloom. Grain sorghum was being replanted in some areas. Cattle were in good condition 

PANHANDLE

Weather was hot and dry, and all crops were starting to suffer from dry conditions. Soil moisture levels were short to adequate. Pasture and rangeland conditions were in fair to good condition. Winter wheat and oat harvests continued. Corn and cotton were in fair to excellent condition. Sorghum conditions were fair to good, and peanuts were in good condition.

NORTH

Soil moisture remained short to adequate for most counties. Winds and temperatures in the 90s dried up most of the soil moisture. About half an inch of rain fell in areas, but more was needed to sustain hay and crop production. Hay producers finished removing the first cutting. The consistent heat allowed for good harvesting conditions for wheat and oats. Some corn was damaged during the excessive rainfall a few weeks ago, but was expected to be replanted soon. Cotton, grain sorghum and soybeans were doing better with sunshine. Livestock were in good condition, and spring-born calves were doing well.

FAR WEST

Temperatures reached 110 degrees with lows in the mid-60s. There were scattered showers in parts of the district and rainfall amounts around 3 inches areas. High temperatures were expected to evaporate much of the precipitation rapidly. Rangeland conditions were improving slightly in areas that received larger amounts of rainfall, however conditions remained poor for most of the district. Continuous triple digit temperatures were good for cotton growth. Some irrigated cotton fields were squaring. Alfalfa fields looked good as well with most farmers irrigating once, rather than twice between cuts. The pecan crop looked good as well, with small clusters visible. Watermelon and cantaloupe were harvested and sold at farmers markets.

WEST CENTRAL

Conditions were hot and dry. Wheat harvest was wrapping up, and hay cutting and baling continued. Cotton planting resumed but some areas were too wet, and producers were hoping to finish planting before the deadline. Grasshoppers, cutworms and other insect pests were increasing in numbers. Pastures were in fair condition. Livestock were in good condition.

SOUTHEAST

Chambers County received heavy rains and more rainfall was in the forecast. Many pastures were holding water. In Jefferson County, rice was progressing, but the pastures were too wet to cut hay. In The first and second hay cuttings were harvested in Grimes County. Rangeland and pasture ratings were very poor to excellent. Soil moisture levels ranged from adequate to surplus.

SOUTHWEST

There were scattered showers across the district with some areas not receiving any moisture. Soil moisture was declining due to warm and windy conditions. Rangelands and pastures were fairly green. Cotton was in good condition. Corn and sorghum continued to mature. Hay harvest continued across much of the district. Travis County reported that wheat harvest was progressing slower than expected. Caldwell County reported cattle, sheep and goat prices remained steady with the prices of pairs slightly increasing. Livestock were in fair to good condition. Wildlife were in good condition.

SOUTH

Temperatures continued to rise throughout the district, and conditions were dry other than a few light-to-moderate showers. Jim Hogg County reported temperatures above 100 degrees. Kleberg and Kenedy counties reported up to 2.5 inches of rainfall. All crops were under irrigation. Peanut planting continued and should be completed soon. Corn fields were in dent stage, and sorghum was turning color. Sunflower and grain sorghum harvests were starting. Corn harvest should begin soon. Midge continued to be an issue in sorghum. Cotton was blooming and improving with good heat units. Bermuda grass and hay grazer were being cut and baled. Rangelands and pastures were beginning to show drought stress, but some areas continued to improve with additional moisture. Beef cattle conditions were improving, and market volumes remained low. Some producers were providing supplemental feed to livestock and wildlife. Feed prices continued to increase at local feed stores, and producers were cutting and baling as much hay as possible. Round bales were averaging $85. Stock tanks were holding up well. Watermelon and cantaloupe harvests continued. Sesame fields were emerging. Many citrus orchards were being taken out of production.