MNI INTERVIEW: Ranchers See Beef Costs Staying Elevated

Beef prices in the U.S. and Canada will remain high on tight supply and continued strong demand, in addition to the lingering risk of new American trade barriers, Canadian Cattle Association Dennis Laycraft told MNI, the kind of food inflation that’s deterred central banks from cutting borrowing costs. 

“We’ve got the tightest cattle numbers in Canada and the United States in probably eighty years," he said. "We are producing almost as much beef from that smaller group of cattle because of how much more efficient our producers are.”

Drought conditions and a parasite discovered in Mexico has disrupted cattle stocks that can't be quickly built up, Laycraft said in an interview after testifying at a Senate committee in Ottawa. Short supply led to a recent shutdown of a Tyson processing plant that is another drag on production, he said. (See: MNI INTERVIEW: Supply Damage Supports BOC Hold- Dal's McNeil)

U.S. feeder cattle prices have climbed 23% this year as of Friday, and Canadian beef striploin prices by the same margin. Canada's cattle herd was little changed according to a July government count after falling since 2021. 

Solid U.S. demand and even faster growth in Asia also support the market, he said. So are higher prices elsewhere in the economy pressuring costs for ranchers. 

“We continue to see strong demand for the product," he said. "I’m not sure how many of our inputs are going down in price.”

INFLATION IMPACT 

The Federal Reserve and Bank of Canada have resisted calls for steeper rate cuts in part because inflation has been slow returning to target. Core indexes have been higher in Canada at 3% versus headline CPI around 2% and grocery prices have topped overall inflation for nine straight months. Officials in Australia and New Zealand have been expressing more inflation concern and the BOJ is tightening this year after a long absence. (See: MNI INTERVIEW:BOJ Goes To Neutral Even If Govt Pressure-Sheard)

Asked if consumers can expect prices to return to normal, Laycraft said: “What is normal? Ever since the pandemic, we’ve been going through a whole bunch of different things.”

“We continue to see good strong sales, not just in Canada but in all of our markets around the world,” he said. 

U.S. sales and prices have been even stronger than Canada, he said. “And the demand is for high-quality grain-fed beef, it’s really growing fastest in Asia.” He told lawmakers that on a recent trip to Japan beef tongue cost more than some prime steaks.  

President Donald Trump has largely spared beef from tariffs but there's concern around North American free trade pact negotiations next year, Laycraft said. Cattle often move between the three countries based on feeding cycles and market conditions. 

“We’re continuing to talk with many of our counterparts in the U.S.... they see the same thing we are, some tight numbers," Laycraft said. "We need those cattle moving so we can keep the processing plants operating.”

“We’ve got to work things out,” on trade, he said. "No one can replace the United States and Canada trade, we’re the largest two-way trade in live cattle beef in the world.”