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Meatpackers Signal End to Record Beef Profits With Smaller Herds

  • Beef giants see higher cattle prices shrinking US margins
  • Consumers are favoring cheaper cuts amid food inflation
Operations At Texana Feeders Beef Cattle Feedlot As Trump Led U.S. To Brink Of Trade War
Photographer: Daniel Acker/Bloomberg

The world’s biggest meatpackers are signaling an end to record-high profits in the beef market as blistering drought in the US means years of tighter cattle supplies.

Prices for beef soared to the highest ever in the wake of the Covid-19 outbreak that boosted demand for meals prepared at home even as slaughterhouses lost workers to the virus and struggled to keep up, resulting in supplies of cattle backing up on the ranch. Now, extreme weather is reducing pastureland and boosting feed costs -- forcing ranchers to shrink herds -- and consumers are shying away from higher prices for steak in favor of cheaper cuts and alternatives like chicken. That’s squeezed profit margins in the US beef sector to about $137 per head of cattle, down from nearly $1,000 a year ago, according to HedgersEdge LLC.