Drop in Beef Sales Could Lead to Higher Prices

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Drop in Beef Sales Could Lead to Higher Prices

According to a recent report, the decline in demand for grain-fed cattle across the United States could lead to higher beef prices in stores once the economy improves.

Reuters reports that feedlots across the country are losing money as consumers turn away from steaks at white-tablecloth restaurants and turn more to fast-food chains and eating at home. The article also notes that consumers are eating more grass-fed animals.

If a number of feed yards close, as predicted, the cost of beef will increase later in the year.

"The losses have been so large in the first three months of 2009 that it is going to be months and months and months until feed yards even have a chance to recover those losses. It is depressing," said Jim Robb, economist at the Lakewood, Colo.-based Livestock Marketing Information Center, to Reuters.

The number of feedlot cattle in the United States has decreased by 6 percent compared with last year. As well, chicken producers have reduced their flocks due to high feed costs and low prices, and some hog farmers have cut back the size of their sow herds.

"In the long term, consumers are going to see much higher meat and poultry prices, because the economic conditions are causing livestock producers to cut production," said Robb.