Last Wednesday, the U.S. Department of Agriculture (USDA) issued its latest World Agricultural Supply and Demand Estimates (WASDE), and the agency forecast that total meat production in the United States from cattle, pigs and poultry will be 95.14 billion pounds in 2015, up from 92.18 billion pounds in 2014. The USDA’s estimate for 2016 is currently 97.39 billion pounds.

Since the May WASDE report, the estimate for beef production has dropped by more than 260 million pounds, and estimated turkey production has dropped by about 375 million pounds. Pork and chicken production estimates were raised by about 60 million pounds and 155 million pounds, respectively.

U.S. turkey production has been hammered by an outbreak of bird flu — highly pathogenic avian influenza (HPAI). The beef production estimate has been lowered because ranchers are retaining heifers for breeding purposes instead of placing them in feedlots for slaughter. While the practice will keep beef prices higher in 2015, the USDA is expecting beef production to increase by 3% in 2016 and beef prices to be lower.

A related issue is that few cattle are heading for slaughter because steers are replacing the heifers that are being held back. Because steers are typically larger, carcass weights are higher and fewer animals will need to be slaughtered to meet wholesale demand. At some point, ranchers and feedlot operators will have to sell regardless of price, driving wholesale and retail prices down even more.

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That indicates to industry experts that beef prices are at or very near a new high. The June WASDE report noted:

Cattle prices for 2015 are reduced from last month on prices to date and the forecast for 2016 is reduced on expected larger supplies of fed cattle.

Wholesale and retail prices for beef remain near record highs, but a combination of competing meats and significant expansion of animals retained for breeding may have set a top for the price for live cattle.

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