A mountain of meat has ended the longest rally in U.S. cattle prices since at least the 1960s, when baby boomers and McDonald's ushered in the American burger boom.
Not only have ranchers added to their herds, but consumers are being inundated with increased supplies of cheaper pork and poultry. Ground-beef prices are down from a record high 11 months ago, and buyers like Darden Restaurants Inc., owner of the LongHorn Steakhouse chain, expect to see costs for the meat decline for at least a couple years.
Cattle futures doubled during a six-year rally as a prolonged drought in Texas and high feed costs left the smallest U.S. herd in six decades. Since then, a grain glut reduced the cost of raising steers as well as hogs and chickens, and the government says meat production will grow this year. Rising supplies probably mean the cattle slump will continue, according to Goldman Sachs.
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