What's Happening?
Beef prices have reached record highs globally due to an imbalance between supply and demand. In the United States, herd sizes have been shrinking, influenced by persistent drought, processing plant closures, and changing consumer preferences. As of mid-2025, cattle slaughter in the U.S. is 6.5% lower compared to the same period in 2024. This reduction in herd size has led to a focus on rebuilding, limiting the number of cows available for slaughter. Additionally, factors such as animal welfare regulations in the EU, an outbreak of New World Screwworm in Mexico, lower calving rates in the UK, and global tariff pressures have further constrained supply. Meanwhile, strong consumer demand continues to sustain feeder cattle prices, with production levels unable to keep pace, thus supporting firm beef prices worldwide.
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Why It's Important?
The surge in beef prices has significant implications for meat companies, particularly smaller businesses that lack the flexibility and funding to adopt procurement strategies to mitigate rising costs. Large corporations may have more options to switch suppliers or use bulk purchasing to hedge against price increases, but smaller companies face a tougher challenge. Importing countries like China and regions such as the EU are particularly affected, with China reducing its imports by 10% since last year and facing increased competition and prices. The cost-of-living crisis further pressures meat companies as consumers become reluctant to spend more on meat, potentially impacting sales and profitability.
What's Next?
Countries like Australia, New Zealand, and Brazil are stepping in to meet the demand left by the U.S., with Brazil seeing a significant increase in beef export turnover. Australian beef is replacing American beef in China due to trade tensions, and is also penetrating other East Asian markets like Korea and Japan. Importing countries may need to adjust their strategies to cope with higher prices and competition. Meat companies, especially smaller ones, will need to explore innovative procurement strategies or risk facing financial challenges.
Beyond the Headlines
The ongoing situation highlights the vulnerability of global food supply chains to environmental and geopolitical factors. The reliance on a few key exporting countries could lead to further market volatility if any disruptions occur. Additionally, the focus on rebuilding herds in the U.S. may lead to long-term shifts in agricultural practices and policies, potentially affecting sustainability and animal welfare standards.
