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While beef prices are projected to fall, one industry economist argued that it’s going to be a while before consumers see any relief.
“It’s going to be a slow and painful process for the consumer,” Wells Fargo Agri-Food Institute chief agricultural economist Michael Swanson told FOX Business when explaining the complex market forces that need to change in order for prices to decline.
The cost of beef has been a particular pain point for consumers for years, with retail beef prices hitting record highs in 2024 thanks to a combination of deteriorating pasture conditions, inflation and contracting cattle inventory, according to the Farm Bureau.
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Beef prices rose sharply in September, outpacing the entire food category on the Department of Labor’s consumer price index. The price of food rose by 3.1% year over year, while prices for beef and veal shot up 14.7%.
Problems persist in the industry, according to Farm Bureau economist Bernt Nelson, who wrote in a blog post last week that the Department of Agriculture’s “Cattle on Feed” report highlights ongoing tightness in feeder cattle supplies.
There were 11.7 million cattle on feed in the U.S. on Nov. 1, down about 2% from 2024 and the lowest number of cattle on feed for the month of November since 2018. The report also estimates that 2.04 million head of cattle were placed into feedlots, down about 10% from last year and marking the lowest number of cattle placed on feed for the month of October in report history.
The smaller number of cattle placed on feed, which is the beef sold in store, is a reflection of tighter supplies of feeder cattle.
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There are also several players in the beef supply chain – cattle producers, the meat packers and wholesalers and the retailers – who want to protect their margins. Since no one in that supply chain wants to accept lower profits, it becomes harder to lower costs for consumers, Swanson told FOX Business.
That competition will eventually push beef prices lower.
The “players in this operation don’t want to give up what they have currently. And so it’s going to be a competition that forces the prices down,” he said, adding that “It’s never a straight line.”
Signs of that shift are already emerging. Swanson said the industry is likely at a turning point following Tyson’s announcement last month that it would permanently close a large beef processing plant in Lexington, Nebraska, by January 2026 and that it was reducing operations at its beef facility in Texas to a single shift.
Immediately after its announcement, live cattle prices fell sharply. Though prices bounced back a bit, they’re still below the recent highs, according to Swanson.
That move “immediately sent a big signal to the market that they’re going to bid a little less aggressively on live cattle,” according to Swanson.
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He said meat processors couldn’t continue to lose money and “Tyson just proved that they’re willing to do something difficult about it.”
He believes cattle prices will start to come down, and that seeing a 10% decline, like there was in 2014, isn’t “out of the realm” for what could happen over the next year and a half.
“If the price of cattle goes down and the wholesale price of beef goes down, yes, the retail price of beef will go down,” he said. “But when is it going to happen? Not immediately. So the consumer’s going to be frustrated and they’re not seeing immediate relief.”
