The US beef industry is entering the anticipated rebuilding phase of the cattle cycle. Inventories are at a historic low after five years of herd liquidation, and heifer retention will further reduce domestic beef production. The industry can expect higher prices across all cattle and beef markets in the coming years, which will lead producers, processors and end users to adjust strategies to manage elevated costs and limited availability of cattle and beef. A new report from Rabobank shows that, to stay resilient, industry will want to focus on effective value creation, risk management and business diversification.

While declining per capita beef supplies support higher market prices, consumer demand will set the limits. New record-high prices are possible across the sector during the next several years. Competing with less expensive pork and poultry on price will be tough, so the industry must demonstrate the added value of beef while continuing to address quality challenges and align with consumer preferences.

As prices rise, the entire supply chain must also improve risk management to tackle increasing costs and limited working capital. Diversifying operations across beef segments can improve profitability and supply management as inventories tighten.

Source: Rabobank