Q:

What factors affect the wholesale price of beef?

A:

Quick Answer

The main factors that affect the wholesale price of beef are the amount of beef cattle available at any given time, the cost to the farmer to raise those cattle and the current consumer demand for beef. As cattle inventory declines, the cost of raising cattle rises or consumer demand grows, prices rise. Similarly, if inventories outpace consumer demand, prices fall.

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Full Answer

Some factors that can increase the cost of raising cattle or cause available inventory to fall include rising feed costs, such as those related to drought in regions where cattle are produced, or disease factors that can shrink a farmer's herd. The amount of beef available relative to consumer demand can be difficult to predict as well because of the relatively long time it takes to raise cattle to be ready to go to market. Farmers must try to predict how many head of cattle they can sell at least a year or two in advance. If consumer demand falls between the time they buy the calves and the time they are ready for market, those animals must still be processed. This leads to a surplus inventory and falling beef prices. If demand grows in that time, prices rise accordingly.

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