U.S. Drought, Cattle Shortage Contribute to Hefty Beef Prices

WASHINGTONExpect to fork over a premium this summer for a juicy burger or steak.

Beef prices have skyrocketed to record highs, national media outlets have reported in recent weeks.   

Gary Morrison, a market analyst with Urner Barry, a publisher of market news on agricultural commodities, told USA TODAY prices rose to their highest point before the Memorial Day weekend, with the average wholesale price of beef increasing to $2.06 from $1.94 a year earlier.

What is causing the spike in prices? Blame Mother Nature and the cattle.

Last year was brutal for farmers. The country suffered the worst drought in a quarter century, destroying field corn and soybean and leading to increases in the prices of crops, according to the U.S. Department of Agriculture (USDA).

Meanwhile, cattle herds are down significantly. According to a report from the University of Missouri, the total number of cattle and calves shrunk to 89.3 million as of Jan. 1. That figure represents the smallest number of cattle since 1952, University of Missouri professor Ronald Plain said in the Feb. 4 report.

"The drought has the potential to increase retail prices for beef, pork, poultry, and dairy products throughout 2013," USDA's Economic Research Service warns.

In a YouTube video posted early this year, Rick Volpe with the Economic Research Service explained that field cornwhile not eaten directly by consumersis processed into animal feed and is a major part of the food supply chain.

Volpe predicted increases in food prices in the latter half of 2013 and early part of 2014. He cited inflation of 3-4% for beef, veil, pork, poultry and eggs. For most food categories that aren't directly impacted by the higher commodities, Volte characterized inflation as "normal". According to USDA, normal inflation for food prices is 2.8%.

Last year, Americans spent 4.2% more ($288.40) per person on beef, The Wall Street Journal reported, citing Livestock Marketing Information Center Director Jim Robb.

Rabobank predicted last year that a "lethargic world economy" would send global beef prices soaring in 2013. Beef companies in Europe and North America face pressure to pass on rising cattle prices to consumers, the Dutch bank said.