Annual beef production is at an 18-year low, down 5.1% from one year ago. The quarterly year-over-year growth rate is minus-3.4%, but rising slowly (gray line in “Rate-of-Change” chart shown above). This suggests that while the pace of decline is easing, there is no strong upside momentum to indicate a positive result this year.

The decline in beef production is consistent with a historically low U.S. cattle inventory that has raised producer prices (beef and veal) 14.6% in the last 12 months. Limited beef production has led to a higher cost this year for consumers who have looked for alternatives. Consumption is up 3.4% (annual basis): a slower pace than last year’s 5.2%.

Herds are increasing and gaining weight due to healthier pasture conditions and extra feed time. This, along with gains in cattle inventory, should lead to lower beef prices in 2016.