Record-high beef prices are drawing national attention, but according to a new research brief from CoBank’s Knowledge Exchange, the real story is not just supply shortages—it’s extraordinary consumer demand.
“Twelve months ago, the question was whether beef demand would hold up at higher prices, but today most analysts are fairly certain that beef value risk is to the upside,” said Brian Earnest, lead animal protein economist with CoBank.
Beef selection and genetics
The COVID-19 pandemic reshaped consumer spending, pushing households to prioritize luxury goods over luxury services. For many, beef became the standout choice.
“The pandemic led us to a place where ‘leveling up’ through access to luxury goods is prioritized over luxury services. And beef, specifically high-quality beef, is a luxury good that can be accessed for at-home consumption at a fraction of the cost at fine dining establishments,” Earnest noted.
He continued that accessibility has helped U.S. consumers develop a taste for high-end beef. Retail per capita beef consumption is expected to hit 60 pounds this year, with 95% of production grading Choice or higher. For the first time since 1988, production of U.S. Prime beef this spring exceeded the volume of Select, marking a new milestone in beef quality.
CoBank said the change in grading can be attributed to advancements in genetics over the last 30 years.
“The U.S. beef industry is producing a much higher-quality product today than it did 30 years ago,” CoBank noted. In the 1980s and 1990s, ranchers identified quality issues in herd genetics and began selectively improving cattle to produce more marbling and better flavor. Programs such as Certified Angus Beef rewarded producers for higher-quality carcasses and raised the overall standard.
Tight supply
CoBank said that even as consumer demand surges, herd rebuilding remains a daunting challenge. After years of drought, forage conditions remain tight. The USDA’s mid-year cattle inventory report confirmed U.S. cattle numbers at just 94.2 million head—the lowest mid-year total in 75 years. The beef cow herd and calf crop were also down 1% from 2023.
Ranchers also face steep costs for rebuilding herds. Calf prices hit a record of more than $400/cwt this summer, making heifer retention more difficult and slowing herd expansion. Adding to the pressure, the discovery of New World screwworm in Mexico constrained imports, which typically provide about 3% of the U.S. supply.
Cow slaughter has also declined sharply—by 12% year over year and 24% below the five-year average—contributing to reduced processing capacity. Saturday kills have been almost non-existent and capacity utilization fell to 77% in late July.
For now, CoBank said that herd liquidation appears to have slowed, but rebuilding has yet to begin. Analysts suggest supplies will remain tight at least through 2026, and likely into 2027.
Revival in demand
On the demand side, beef has enjoyed a revival in public perception. Once criticized for being unhealthy, Earnest noted that beef is now championed by fitness-conscious consumers for its high protein content. The growing popularity of fitness lifestyles and weight management drugs such as GLP-1 medications has only added to demand. Many consumers are deliberately increasing protein intake, placing beef in the spotlight as a nutrient-dense option.
“U.S. consumers can’t seem to get enough protein these days, and among animal proteins beef remains king,” Earnest said.
Even sharp price increases have not curbed enthusiasm. The Bureau of Labor Statistics reported that while core inflation rose 2.9% year over year in July, All-Fresh retail beef prices jumped 9%, averaging $8.90/lb. Yet, according to CoBank, “even at those levels, prices have been unable to tame unyielding consumer interest in beef.”
Consumers are trading down from ribeye and filet to chuck roast or ground beef, but overall demand continues to climb. As CoBank observed, this has created unusual pressure on ground beef supply, which has in turn boosted reliance on imports for lean trim. U.S. net beef imports topped 2.4 billion lbs. in the 12 months ending in May, with Brazil playing a significant role.
Strong U.S. demand has rippled through global markets.
The Food and Agriculture Organization’s bovine meat index hit a record 141.2 in August, up 12.5% from the prior year. U.S. imports surged early in 2025, with the “other nation” tariff-rate quota filled in just 17 days—much of it Brazilian beef. Even after the 26.4% tariff kicked in, Brazilian imports remained competitive. However, a new 50% tariff will test that strength later this year.
The fundamentals of the beef market, including exceptional demand, improved quality and strained supply, have created a rare scenario where record prices have not triggered a drop in consumption, CoBank noted. With U.S. consumers embracing protein-rich diets, global buyers competing for supplies and herd rebuilding years away, beef remains one of the few commodities defying traditional price elasticity.
“Beef appears to be among the few exceptions to the rule of price elasticity,” Earnest concluded. “Even at record prices, demand has not softened—it has actually edged upward.” — Charles Wallace, WLJ contributing editor
