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Americans May Have to Say Goodbye to Steak and Burgers as Beef Costs Rise

Americans May Have to Say Goodbye to Steak and Burgers as Beef Costs Rise

Americans could be cutting steaks and burgers from their diets as inflation soars, if beef-packer profit margins are any indication. 

Processors like Tyson Foods Inc. and JBS USA are making the least amount of money per head of cattle slaughtered in more than two years, according to data from HedgersEdge LLC. That’s a sign that demand for the luxury meat is flagging.

Consumers more likely to splurge on steaks and chops when the stock market is up. That’s in doubt as Russia’s invasion of Ukraine pressures markets. Meat prices are part of what’s behind soaring inflation that’s the worst in four decades, and consumers are getting sticker shock. 

“On the demand side, the concern is discretionary spending,” said Don Roose, president of brokerage U.S. Commodities Inc. in West Des Moines, Iowa. “Will consumers look to cheaper proteins or will they skip proteins?” 

Americans May Have to Say Goodbye to Steak and Burgers as Beef Costs Rise

Estimated profit margins for beef packers fell to $102.45 per head Tuesday. That’s the around the lowest since before the coronavirus pandemic began early in 2020. During the outbreak, workers inside slaughterhouses caught the virus and forced plants to close, limiting the amount of beef available and sending prices soaring to record highs. Packer margins peaked at $1,009.30 per head in May 2020, adding to criticism of pandemic profiteering by meat companies.

The balance is starting to shift as the war is also raising prices for grains -- including wheat hitting a record. Elevated feed prices will prompt livestock farmers to scale back herds, hitting profits for slaughterhouses. 

©2022 Bloomberg L.P.