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Wholesale beef prices turn sharply lower

Tuesday, October 27, 2015

Beef prices typically experience a seasonal decline at the end of summer, but the decline in prices since August this year has been particularly steep, and the combination of abundant supplies and lower demand suggests cattle and beef prices could continue to decline. Cattle are remaining on feed longer and are currently being marketed at record-high weights, resulting in increased beef production this year despite the historically small cattle supplies. At the same time, beef demand is in the midst of its seasonal decline as attention shifts from grilling to roasting items. As a result, wholesale beef prices have declined steadily since late August, while the price premium that Choice beef typically receives over the Select grade is diminishing, reflecting current strong supplies of these higher graded cuts relative to previous periods. Adding to the market pressures, beef exports are down from this time last year due to a strengthening U.S. dollar and softening demand for U.S. beef, resulting in larger-than-anticipated volumes to be consumed in the domestic market and the expectation for continued downward pressure on prices in the near term. This chart is from the October Livestock, Dairy, and Poultry report.

U.S. poultry and eggs output has grown more rapidly than dairy and meat animals

Friday, October 23, 2015

Total U.S. livestock output grew 130 percent from 1948 to 2011, with the poultry and eggs subcategory growing much faster than meat animals (including cattle, hogs, and lamb) and dairy products. In 2011, the real value of total poultry and egg production was more than seven times its level in 1948, with an average annual growth rate exceeding 3 percent. The rapid growth of poultry production is due largely to changes in technology—advances in genetics, feed formulations, housing, and practices—and increased consumer demand. Retail prices of poultry fell in the late 1970’s and 1980’s, relative to beef and pork prices, leading to expanded poultry consumption in that period. Increased domestic consumption and exports were also driven by consumer response to an expanding range of new poultry products, as the industry moved away from a reliance on whole birds and production shifted to cut-up parts and processed products such as boneless chicken, breaded nuggets/tenders, and chicken sausages. This chart is found in the ERS report, Agricultural Productivity Growth in the United States: Measurement, Trends, and Drivers, July 2015.

India projected to remain the leading global beef exporter

Friday, October 9, 2015

Since 2009, India’s exports of beef—specifically water buffalo meat, also known as carabeef—have expanded, with India moving ahead of Brazil to become the world’s largest beef exporter in 2014. India’s beef exports grew about 14 percent annually between 2000 and 2015, and are expected to lead major exporters with about 6 percent annual growth during 2015-2025. India’s exports of relatively low-cost beef (primarily to low- and middle-income markets in Southeast Asia and the Middle East) reached a 24 percent global market share in 2015, and that share is projected to increase to 32 percent by 2025. The U.S. share of the global beef market has fluctuated, but averaged 12 percent during 2013-2015, and is projected to rise to 15 percent in 2025. This chart is based on data and analysis from USDA Agricultural Projections to 2024.

Cattle sales shifting from cash sales to formula pricing and other arrangements

Friday, September 11, 2015

Historically, nearly all livestock were bought and sold in large, public markets where hundreds of buyers and sellers would compete for the best price based on the information that each brings to the market. These cash transactions resulted in prices and pricing information that were freely available and shared widely through public and private sources. Beginning in the mid twentieth century, the industry evolved and became more concentrated and coordinated at all levels. The use of cash markets declined sharply in favor of various forms of price contracts, such as forward contracts, marketing agreements, packer ownership, and formula pricing—where a cash price might be used for reference but premiums or discounts are applied based on a pre-determined formula. In the beef cattle market, the last decade has seen a shift away from cash market sales in favor of formula pricing, which has led to concerns that the cash prices used in those formulas could be unreliable, and that the limited volume of public sales undermines price transparency and market efficiency. The Livestock Mandatory Price Reporting Act was passed in 1999 in response to these and other concerns, and requires all major meatpackers to report the prices they pay for sheep, cattle and hogs, as well as their selling prices for lamb, beef and pork. This chart is from the ERS report, Mandatory Price Reporting, Market Efficiency and Price Discovery in Livestock Markets.

Retail pork and chicken prices down from a year ago, beef prices higher

Thursday, July 2, 2015

When shopping at the meat counter this Fourth of July, consumers may notice differences in prices per pound compared to last year. A pound of pork chops sold for $3.79 in May 2015 compared to $4.11 per pound in May 2014, a decrease of 7.8 percent. The price of boneless chicken breasts has also fallen, decreasing by 1.9 percent over the last year to $3.41 per pound. In contrast, beef prices are up this year, largely due to drought conditions throughout the Southern Plains and Southwest. Higher feed costs and decreased water supplies forced farmers to shrink their herd sizes to historically low levels in 2014, causing beef prices to rise by more than 10 percent over the last year. On average, consumers are paying $0.28 more per pound for ground beef and $1.23 more per pound for sirloin steak in May 2015 compared to a year earlier. Information on ERS’s food price forecasts can be found in ERS’s Food Price Outlook data product.

U.S. beef production is historically low, but expected to increase in 2016

Wednesday, June 24, 2015

Historically small U.S. cattle inventory continues to support high beef prices in 2015, but at least in the short term, increasing imports of processing beef (especially from Australia) and heavy carcass weights have helped moderate some of the price pressures. Fed cattle live and dressed weights have remained significantly heavier than last year due in part to improvements in pasture conditions and extra time on feed as a result of reduced steer and heifer slaughter. One uncertainty is the extent to which feeding cattle to heavier weights will offset the decrease in slaughter numbers in 2015, and the ultimate effect this will have on total commercial beef production. Despite heavier cattle, U.S. commercial beef production is currently expected to fall to a multi-decade low of 24 billion pounds in 2015. U.S. beef production is expected to increase in 2016 due to a rising cattle inventory and continued heavier carcass weights. This chart is from Livestock, Dairy, and Poultry Outlook: June 2015.

Cattle producer returns bolstered by higher cattle prices and lower feed costs

Friday, February 13, 2015

Strong feeder cattle prices and declining feed costs are supporting high returns for cow-calf producers. The price of 750-800 lb. feeder steers at the Oklahoma National Stockyards exceeded $220 per hundredweight at the end of 2014, up $65 since January and over $100 since May 2013. At the same time, the price of corn (a major component of cattle feed) fell from above $7.00 per bushel in mid-2013 to under $4.00 per bushel by December 2014, reflecting a record 2014 crop projected at 14.4 billion bushels. Despite weaker demand, beef prices are at record high levels due to tight supplies and historically low cattle inventories. Expanding the cattle herd is a long-term process due to the time it takes cattle to mature, and requires holding some heifers off market for breeding purposes. Recently released data from USDA’s Cattle report suggests that inventories are beginning to grow, and cattle prices have begun to retreat. With corn prices forecast by USDA to average around $3.50 per bushel for the 2014/15 marketing year, returns to cow-calf operators should remain favorable into 2015. This chart is based on data from ERS’s Livestock & Meat Domestic Data and Feed Grains Database.

Choice beef retail values reach record highs in 2014

Thursday, January 15, 2015

U.S. retail choice beef values climbed through 2014, reaching a record high of $6.30 per pound in November. Retail value is defined as the average value at the grocery store of a basket of beef cuts, measured in cents per pound of retail weight. In November 2014, retail values were about $1.00 above the highs reached in 2013 and roughly $1.50 per pound above the previous five-year average. The sharpest jump in month to month prices in the past 5 years occurred between July and August 2014, when prices increased $0.29 per pound. Higher retail beef prices reflect increased cattle prices due to historically low cattle inventories and cattle being held off the market for breeding purposes as growers attempt to rebuild herds. The pace of slaughter has also slowed as feedlots take advantage of lower feed costs to hold cattle back longer and raise them to record high weights. U.S. beef production is forecast to decline further in 2015, indicating that retail prices are likely to remain high. This chart is based on data from Meat Prices Spreads that was last updated December 17, 2014.

U.S. cattle dressed weights reach record levels

Wednesday, November 19, 2014

The average weight of cattle slaughtered in the United States is increasing in 2014, as rising prices for cattle and beef, coupled with declining feed costs, have induced growers to feed cattle for longer periods. The average dressed weight—the weight of the carcass minus feet, head, hide, and organs—of U.S. slaughtered cattle has been increasing in recent years, but rose sharply from 799 lbs/head to 822 lbs/head between September 2013 and September 2014. U.S. cattle and beef prices have set a number of successive record highs since mid-2013 because of declining cattle inventories resulting from drought-degraded pasture and forage conditions during 2010-12. With improved weather, cow-calf operators appear to be rebuilding herds by retaining heifers for breeding, adding upward pressure to cattle prices. Lower feed prices resulting from record U.S. corn and soybean crops are creating incentives to feed animals to higher weights. Also, as a direct result of placing fewer heifers in feed lots, there is a larger proportion of steers—which typically weigh more than heifers—in the slaughter mix, contributing to heavier average weights. Find additional analysis in Livestock, Dairy, and Poultry Outlook: November 2014.

U.S. cattle imports on the rise as farmers rebuild inventories

Friday, November 7, 2014

U.S. cattle imports have increased from both Canada and Mexico in 2014, totaling 1.413 million head through August. Imports are up 14 percent from Mexico and 12 percent from Canada due to stronger U.S. demand for feeder cattle. U.S producers are seeking to rebuild animal inventories reduced by several years of dry weather and take advantage of the low U.S. feed prices stemming from record 2014 U.S. corn and soybean harvests. U.S. feeder cattle demand is reflected in the sharp increase in the average price for Nebraska feeder steers (7-8 hundredweight [cwt]) from $149.45/cwt during the first three quarters of 2013 to $205.57/cwt during the same period of 2014. Imports over the summer months, typically the slowest season, were well above last year’s levels, and there are indications that increased shipments continued into September 2014. U.S. cattle imports are now forecast at 2.200 million head in 2014 and 2.225 million head in 2015. Although both Canada and Mexico have relatively low cattle inventories, strong U.S. prices are expected to continue to pull cattle across the border. Find this chart and additional analysis in Livestock, Dairy, and Poultry Outlook: October 2014.

Grocery store prices for beef, pork, and eggs are up as U.S. supplies decrease

Tuesday, September 16, 2014

Retail food-at-home prices in the second quarter of 2014 were 2.3 percent higher than a year ago, as most at-home food categories increased in price. Retail beef and veal prices were up 10.8 percent as the supply of beef is strained by historically low herd sizes. Over the same time period, pork prices increased 11.2 percent, partially the result of the Porcine Epidemic Diarrhea virus, which has reduced litter sizes and increased piglet mortality. Egg prices are also up, in part due to increasing exports and a strong domestic demand for eggs and egg products. The increases in beef and veal, pork, and egg prices are the largest year-over-year increases since the fourth quarter of 2011. This chart appears in the Food Prices and Spending section of ERS’s Ag and Food Statistics: Charting the Essentials data product, updated September 10, 2014. More information on ERS’s food price forecasts can also be found in ERS’s Food Price Outlook data product.

Drought impacts help drive U.S. cattle and beef prices to record levels

Tuesday, September 2, 2014

U.S. cattle and beef prices have moved into record territory since mid-2013, primarily due to drought impacts on U.S. cattle inventories. In addition to the widespread U.S. drought in 2012, drought conditions have affected important U.S. cattle raising regions, particularly in the Plains and Southwest, since 2010. The dry weather degraded pasture conditions and forage supplies, leading cow-calf operators to liquidate herds. Increases in U.S. imports of feeder cattle from Mexico and Canada have been insufficient to maintain or build U.S. inventories, in part because Mexican producers are trying to build their herds to supply more beef to the U.S. market. U.S. feed and forage supplies have improved in 2014, but herd rebuilding, as indicated by retention of heifers for breeding, is progressing slowly because some growers are selling animals while prices are high, rather than retaining them for herd rebuilding. Reduced beef supplies and high prices have led to an estimated 5 percent decline in U.S. per capita beef disappearance (a measure of consumption), as well as a sharp reduction in U.S. net beef exports, between 2011 and 2014. Find additional analysis in Livestock, Dairy, and Poultry Outlook: August 2014.

Continued growth projected in China's meat imports

Tuesday, May 27, 2014

While USDA projects robust increases in China’s meat production and imports of feed grains, China’s meat imports are also projected to rise. Pork imports are projected to show the most growth, rising from about 750,000 tons in 2013 to 1.2 million tons by 2023. The United States, Canada, and European Union are the main suppliers of pork to China. China’s meat consumption is expected to expand at a pace similar to the trend of the past decade. Pork will continue to play a central role in China’s meat economy (China accounts for half of world production and consumption), however, poultry is gaining in popularity, largely because it is cheaper than pork. Restaurants, fast food chains, and cafeterias play a key role in diversifying meat consumption, since many feature specific kinds of meat or chicken. Beef and mutton are important parts of popular ethnic cuisines becoming popular among the broader population. Although China is expected to continue producing most of its own meat, China’s livestock sector is under pressure from rising costs, disease, environmental regulations, and resource constraints, which could lead to China’s meat imports rising even further if production cannot sustain its current pace of growth. Find this chart and more analysis in the April Amber Waves feature article "China in the Next Decade: Rising Meat Demand and Growing Imports of Feed."

Wholesale-to-retail price spread increases for U.S. choice beef

Monday, April 21, 2014

The spread between farm prices and retail prices of U.S. choice beef has been rising in real terms since 2000 because of an increasing spread between wholesale and retail prices. The spread between wholesale and retail choice beef prices averaged 75.5 cents/lb during the 1990s, but averaged 93.7 cents/lb during 2009-13. The ERS price spread calculations standardize the farm, wholesale, and retail product values over time, so the expanding wholesale-to-retail spread suggests rising costs in that segment of the supply chain, rather than changes in product mix or quality at each price point. In contrast, the farm-to-wholesale price spread has tended to decline slightly since 2000. These trends in price spreads may arise from differences in cost inflation in key inputs in the farm-to-wholesale and wholesale-to-retail segments of the supply chain, differences in productivity growth in each segment, and changes in the degree of market competition in each segment. This chart is based on data from the Meat Price Spreads data product.

Per capita availability of chicken higher than that of beef for a third year

Thursday, April 17, 2014

According to ERS's 2012 food availability data, the per capita supply of chicken available to eat in the United States continues to outpace that of beef. In 2012, 56.6 pounds of chicken per person on a boneless, edible basis were available for Americans to eat, compared to 54.5 pounds of beef. Although down from its peak of 60.9 pounds per person in 2006, chicken availability has been higher than that of beef for the past three years. Chicken began its upward climb in the 1940s, overtaking pork in 1996 as the second-most-consumed meat and overtaking beef for the No. 1 spot in 2010. Pork availability, which fluctuated between 49.9 and 46.6 pounds per person over the 1981 to 2009 period, dropped to 42.6 pounds per person in 2012. This chart is from the Summary Findings in ERS’s data product, the Food Availability (Per Capita) Data System.

Impact of 2012 drought on beef prices lower than expected

Thursday, November 7, 2013

Meat prices were expected to rise sharply in the wake of the 2012 drought, but this has not been the case. Higher feed prices, due in part to the 2012 drought, prompted ranchers to reduce herd sizes and send more animals to slaughterhouses than usual. This influx of livestock caused cattle prices, and in turn wholesale beef and veal prices, to increase less in 2012 than in 2011, as measured by the Bureau of Labor Statistics’ Producer Price Index (PPI). In 2012, the cattle PPI and wholesale beef and veal PPI increased by 8.6 and 10 percent, respectively, below the increases of 22.1 and 15 percent in 2011. While retail prices, as measured by the Consumer Price Index (CPI), track changes in the PPI, the swings are typically smaller. The beef and veal CPI rose by 6.4 percent in 2012 versus 10.2 percent in 2011. More information on food prices can be found in ERS’s Food Price Outlook data product, updated November 5, 2013.

Seasonal dips in ground beef prices lower the cost of Memorial Day burgers

Wednesday, May 22, 2013

Memorial Day weekend kicks off the barbecue season for many Americans, and a grilled burger topped with cheese is a holiday staple. Using price data from the U.S. Bureau of Labor Statistics, ERS calculated the average national cost of a home-cooked cheeseburger. The cost was found to vary seasonally, usually decreasing in February, May, and June while reaching annual peaks in November or December. Most of the seasonal variation is due to the changes in beef prices. The April 2013 cost of $2.07 for a home-prepared cheeseburger is up 61 percent since 2000, while overall food-at-home prices have increased 41 percent in that time. Much of that difference is due to the strong beef price inflation of recent years resulting from low cattle inventories and high feed prices. More information on food price changes and forecasts can be found in ERS’s Food Price Outlook data product.

Farm sector exposure to drought worsened during the summer of 2012

Thursday, April 4, 2013

As of mid-August 2012, 43 percent of farms in the United States were experiencing severe or greater levels of drought and another 17 percent were facing moderate levels of drought (for a description of severity levels, see droughtmonitor.unl.edu/classify). A striking aspect of the 2012 drought was how the drought rapidly increased in severity in early July, during a critical time of crop development for corn and other commodities. The chart shows the progression from mid-June to mid-August of severe or greater drought within the agricultural sector. While drought conditions eased some during early September, for most crop production, exposure to drought during June-August determined the drought’s impact on agricultural production. From mid-June to mid-August, the share of farms under severe or greater drought increased from 16 to 43 percent of all farms. Total cropland under severe or greater drought increased from 20 to 57 percent, while total value of crops exposed increased from 16 to 50 percent. As of mid-July, areas with over half of the value of cattle production were already exposed to severe drought; by mid-August, almost two-thirds were exposed. This chart is based on the table found in U.S. Drought 2012: Farm and Food Impacts on the ERS website, updated March 2013.

Japanese rule change may lead to further rebound in imports of U.S beef

Monday, April 1, 2013

Effective February 1, 2013, Japan has permitted imports of beef from all U.S. cattle less than 30 months of age, a decision that removes most of the restrictions imposed on imports of U.S. beef at the end of 2003. In late 2003, Japan banned U.S. beef in reaction to the discovery of bovine spongiform encephalopathy (BSE) in the United States. In 2005, Japan reopened its market to U.S. beef imports from cattle slaughtered at less than 21 months of age. However, U.S. beef exports to Japan, as well as Japanese beef consumption, have not recovered to the levels they reached in 2003 and earlier. The latest action is expected to lead to a further rebound in the volume of U.S. beef and byproducts exported to Japan; to allow somewhat lower prices in Japan for U.S. beef; and to raise the value of beef carcasses in the United States. This chart appears in Japan Announces New Rules for Imports of U.S. Beef.

U.S. net beef exports narrow with tight domestic supplies

Friday, March 8, 2013

The United States exported 2.45 billion pounds of beef in 2012 (in carcass weight equivalents), 12 percent below the record 2.78 billion pounds exported in 2011. The decline interrupted the steady recovery of U.S. beef exports after the discovery of a U.S. case of bovine spongiform encephalopathy (BSE) in 2003 led to a sharp drop in U.S. shipments. While global export demand for U.S. beef remained robust, the decline in 2012 occurred primarily because tightening domestic cattle inventories reduced exportable supplies. U.S. beef imports have trended downward since 2003, when Canada reported the discovery of BSE. Canadian beef imports resumed quickly thereafter on a restricted basis, but imports from Australia and New Zealand were limited in subsequent years by tight supplies and domestic herd rebuilding. In 2012, U.S. beef imports were 8 percent higher, driven by tightening U.S. supplies and strong demand. Increased U.S. imports were mostly from Oceania, as herd rebuilding in the region allowed more beef to be exported to the United States. This chart appears on the ERS Cattle and Beef topic page.