US beef prices are on something of a rollercoaster ride this year, mostly due to the disruption caused by the COVID-19 pandemic. In early April, prices for boxed ribeye beef (an industry price standard that tracks prime beef prices) were trading around $15/kg, which is exactly where you would expect them to be in a normal year.

However, once lockdown measures were introduced in the US most restaurants, cafés, diners, hotels and fast food outlets shut their doors. Just like in Europe, the loss of the important food service sector sent a rapid shock through the US beef market.

Prices for prime US beef plunged more than 20% in a matter of days to lows of $11.5/kg (see Figure 1).

At the same time, US prices for ground beef or mince held steady and actually started to rise towards the $10/kg mark as retail demand for mince skyrocketed.

However, the drop in prime beef prices didn’t last long. By late April, a number of major clusters of COVID-19 cases had broken out inside meat factories up and down the US.

The outbreak of these clusters forced a large number of US meat factories to suspend operations for a brief period in order to contain the virus.

All of a sudden, there was a major hole in the beef processing capacity of the US and beef supplies tightened rapidly as farmers had nowhere to send their cattle for processing.

As can be seen in Figure 3, weekly beef production in the US collapsed as much as 33% from the start of April to early May.

This sharp reduction in beef supplies saw the price of boxed ribeye beef soar to record heights of almost $24/kg. At the same time, the price of ground beef was touching close to $12/kg, which is four times the price level it would normally trade at.

However, the price spike didn’t last long and US beef prices began adjusting down to normal levels once the US meat industry got a handle on the COVID clusters. US beef production is now back on track at around 245,000t per week, which has put downward pressure on prices.

Almost as sharply as they rose, prime beef prices in the US have come crashing back down to around $15/kg – right where they were before the pandemic hit the US. Similarly, US ground beef prices are back in line with normal levels at around $3/kg.