Beef prices hit a fresh record, and hopes for consumer relief are fading as drought and the reemergence of a deadly cattle parasite keep the U.S. herd smaller for longer.
U.S. consumers on average paid $7.064 for a pound of ground beef in May, slightly higher than the previous month but up 13% from a year earlier, according to the U.S. Bureau of Labor Statistics. Prices have steadily climbed as the U.S. cattle herd shrank to its lowest levels in 75 years, while the prospects for rebuilding supplies have deteriorated in recent weeks.
Beef prices have remained stubbornly high as ranchers have been slow to expand herds after years of drought and elevated production costs. Continued dryness and the New World screwworm are making that effort even more difficult, complicating President Donald Trump’s efforts to bring down food prices ahead of the midterm elections.
Steak prices averaged $12.802 a pound, dropping 1.7% from the prior month, though up 16% from a year ago. That could be because retailers discounted beef more heavily heading into the grilling season, said Anne-Marie Roerink, the founder of market research firm 210 Analytics.
For big grilling holidays like Memorial Day and Father’s Day, “retailers are not just competing for the steak dollar, but everything else around it, from the potato salad to the corn on the cob, buns, desserts,” Roerink said. “With consumers eyeing value, some retailers may be promoting beef a bit more this month to capture the full cart.”
The latest threat to beef prices is the New World screwworm, with a batch of cases in Texas calves marking the first outbreak of the parasite in livestock in five decades. While the pest poses no threat to food safety, its presence is disrupting the transportation of animals and threatening to squeeze margins further for the struggling beef industry.
“The concern is not food safety, but the risk that containment measures, quarantines and movement controls further tighten already constrained cattle supplies,” Stephens analysts led by Pooran Sharma said in a note.
The outbreak has already prompted restrictions. Oklahoma, Missouri and Georgia have imposed permitting and inspection requirements for some livestock shipments. Canada has blocked shipments that have been in Texas within the previous 21 days. The US, meanwhile, has halted exports of cattle, dogs and other animals to Mexico.
The U.S. has also maintained its halt on live animal imports from its southern neighbor, which has been in place for much of the past year to contain the spread of the screwworm. The loss of that trade, which used to amount to about a million extra head into the U.S. each year, has also tightened cattle availability.
Agriculture Secretary Brooke Rollins said last week that the border move was necessary, even as there is “no doubt” that closing the ports caused higher beef prices. The supply crunch also deepened losses for beef processors, who have paid higher prices for cattle than they are receiving for meat.
The current situation threatens to make it even more difficult to rebuild U.S. herds, as young calves and their mothers are among the most vulnerable to the screwworm fly, which lays its eggs in the open wounds of warm-blooded animals.
Still, drought remains the biggest concern for the market, said Cody Norton, who founded ClearCut Forecasting and has two decades of experience in the beef industry. At this point, the screwworm “remains a localized animal health event, not a production-level supply disruption,” he said. A more immediate concern is that nearly 80% of cattle are in areas facing dryness or drought.
The impact of dry weather is already showing up in the beef supply chain. The number of animals placed on feedlots in April rose 6% from the prior year, according to the Department of Agriculture. While that on the surface should indicate an improvement to beef supplies, much of that increase was led by lighter-weight animals being sold earlier due to drought conditions, University of Florida extension agent Hannah Baker wrote.
The latest figures and dynamics are “casting doubt on the recovery timeline of beef profits” for meatpackers, said Barclays analysts led by Benjamin Theurer. That rebound, initially estimated for the second half of 2027, will now more likely occur in fiscal year 2028, the analysts said.
Peng writes for Bloomberg.