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The Supply Of Beef Is Shrinking For The Holidays

Justin Sullivan, Getty Images

Cattle futures extended a rally to a record amid shrinking supplies of U.S. beef and increasing demand for the meat as grocers boost purchases before the Christmas holiday. The rising price of feed forced many ranchers to sell off their herds over the summer creating a short-term surplus of beef.

Now the supply has dwindled and it’s starting to show up in the price you’re paying at the grocery store and at your favorite restaurant. Grocers are stocking up on beef, which is often served as part of the Christmas meal.

Consumers may pay as much as 6.5% more for the meat in 2012, the biggest increase of any food item. The number of cattle is still really tight.

Cattle futures for February delivery rose 0.8 percent to settle at $1.32725 a pound on the Chicago Mercantile Exchange. Earlier, the price reached $1.32925, a record for the most-active contract.

U.S. commercial beef output in the 10 months through Oct. 31 fell 1.1% from the same period in 2011, says the USDA. The herd as of July 1 shrank to the smallest since at least 1973. Ranchers culled herds after the worst drought since 1956 eroded crop yields, sending corn, the main ingredient in feed, up as much as 68% since mid-June.

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