Dwindling cattle herds in the U.S. have consumers asking: Where’s the beef?
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The number of cattle slaughtered in the U.S. declined to 2.2 million head in March of this year, down from 2.5 million a year earlier, according to the U.S. Department of Agriculture (USDA). The U.S. cattle herd now stands at its smallest size since the 1950s, when the U.S. population was half its size today, says the USDA.
The situation has pushed beef prices in the U.S. to an all-time high, further pressuring consumers who are struggling with rising grocery bills. The retail price of ground beef is at a record $6.70 per pound, 12% higher than a year ago and the highest level on record dating back to 1984.
Impact on Producer Stocks
The price of live cattle has risen more than 25% over the past 12 months as ranchers face rising costs and diminished herd sizes. Consequently, beef production in America has fallen by 300,000 pounds to 1.9 million over the last year, pushing prices in supermarkets up sharply.
Beef has failed to follow recent declines in the prices of eggs and chickens across America, says the USDA. The current situation has impacted the stocks of leading beef producers such as Tyson Foods (TSN), Hormel Foods (HRL), and Pilgrim’s Pride (PPC), pushing them lower.
Is HRL Stock a Buy?
Hormel’s stock has a consensus Hold rating among four Wall Street analysts. That rating is based on one Buy and three Hold recommendations issued in the last three months. The average HRL price target of $26.75 implies 27% upside from current levels.
