USDA: Record High Beef Prices Here to Stay

WASHINGTON - Record high beef prices will not decline for the next two years, the U.S. Department of Agriculture said on Tuesday.

Strong consumer demand, a drought in the plains region, and a case of mad cow disease in Canada have created a perfect storm for U.S. cattle prices, which have skyrocketed above $100 per 100 pounds. Last year, cattle prices hovered around $60.

"Given the tight federal cattle supply situation, retail beef prices are likely to continue on a record-setting path as the higher prices are passed on to consumers," the USDA said in its monthly livestock outlook report. "The question is to what degree."

The average retail beef price in September was $3.08 per pound, up from $2.82 per pound last year, according to industry. The Labor Department said in its monthly report on U.S. consumer prices on Tuesday that food prices rose 0.6 percent in October, noting high beef prices as a key factor.

With ranchers sending as much cattle to market as possible, the USDA said U.S. beef production would not begin to expand until at least 2006.

This year's calf crop was forecast at 38 million head, the smallest since 1951, the USDA said. "The loss of feeder cattle imports from Canada further tightens the supply situation." Canada normally ships 1 million head for U.S. slaughter.

The United States imposed a ban on all cattle imports from Canada in May, after Canada reported a case of mad cow disease in Alberta. In October the USDA proposed relaxing the ban.

The USDA, which has allowed imports of some low-risk Canadian beef products, will begin drawing up a final rule on Canadian cattle after a 60-day public comment period on the proposal ends in early January.
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