We know what you’re thinking: Independence Day is all about hot dogs and fireworks.
But those who enjoy their burgers might be in for a pleasant surprise. Ground beef prices are at a three-year low, and that means more people are likely to indulge, with sales projected to keep pace with last year’s surpassing $803 million around the July 4 holiday, according to a report by the market research group Nielsen.
According to May data from the Bureau of Labor and Statistics, one pound of ground beef cost averaged $3.56, down 68 cents from the 2015 peak of $4.24, making it the cheapest since 2014.
Drought and grain shortages initially drove up prices, prompting ranchers to expand their herds in pursuit of bigger profits. That surge in supply is now responsible for prices falling, and economists say the prices should remain relatively low for a while.
“Three years ago we were at a time period of record price for beef and cattle and that was directly related to the declining cattle numbers in the U.S. and drought in Texas and the Southwest in 2011 and 2012,” said David Anderson, livestock economist at Texas A&M University in College Station. “The signal to ranchers from record-high prices is to try to produce more. And that’s what we’ve done.”
While wholesale prices dropped quickly, retail prices are just now catching up.
“Retailers are slower than the wholesale market to raise or lower the prices,” said Chris Hurt, professor of agricultural economics at Purdue University in West Lafayette, Ind. “They want to show more stability to their consumers week to week. But as the wholesale price is going down, retailers are also in the process of lowering the retail prices of beef.”
The United States is already a world leading beef producer, and it is only growing larger. Projections show beef production in America will reach about 26.3 billion pounds this year, up 4 percent since 2016 and the highest since 2010, according to data from the U.S. Agriculture Department.
This is because demand is coming from not only inside the United States, but also from foreign consumers in markets such as China, where America recently resumed exports after a halt of over a decade.
“Our exports of beef have been booming,” Anderson said. “Some of that is because our prices are more competitive and because of what’s happening to our competitors. Australia had a drought that cut their production dramatically and they have less beef to sell and more expensive. Another case is Brazil — that had a corruption scandal that dealt with companies bribing meat inspectors. That hurts some of their exports to some destinations.”
Experts expect retail beef prices to continue to decline next year, but given the vagaries of the cattle business nothing is certain.
“There is concern about dry weather in the Upper Great Plains right now, in the Dakotas,” Hurt said. “We’ve seen grains and feed prices ratchet up in the past week and feed prices can be very influential to causing … producers not to expand or even to contract. But we’ll have to see. The best thought is that we will continue to expand.”