Beef is poised to stay pricey as America’s cattle herds shrink

The American cattle herd shrank more than expected to the lowest seasonal levels since 2014, an indication that beef prices will remain high for at least another couple of years.

There were 95.9 million cattle as of July 1, down 2.7% from a year ago, the U.S. Department of Agriculture said Friday in its biannual cattle-inventory report. Analysts surveyed by Bloomberg expected a 2.3% decline.

Years of drought, high feed costs and relatively low cattle prices have forced ranchers in the U.S. to send cows to slaughter over the past few years, leading to a steep reduction in the size of their herds.

While a recent spike in cattle prices to record levels is expected to encourage farmers to retain more heifers for breeding this fall, it will be at least another two years until more cattle are widely available for beef production. Tight supplies of cattle in the U.S. have hurt profits of meatpackers including Tyson Foods and JBS, both of which are set to report earnings in August.