The U.S. cattle herd has shrunk to the smallest since three years before Ray Kroc opened his first McDonald’s Corp. (MCD) (MCD) hamburger stand, reducing supply and raising prices even as domestic demand sinks to a two-decade low.
Beef output in the U.S., the biggest producer, will drop for a third year in 2013 after drought destroyed pastures, forcing farmers to cull herds to the smallest since 1952, government data show. Cattle futures traded in Chicago may rise to a record $1.33 a pound by year-end, according to Ron Plain, a livestock economist at the University of Missouri at Columbia who has advised the U.S. Department of Agriculture.
Rising prices are shoring up income for farmers contending with consumer concern over a type of treated meat dubbed “pink slime” and a case of mad cow disease in April. While U.S. beef consumption is contracting for a sixth year, exports last year were the highest ever. Global retail-meat costs gained 4.8 percent since February 2011 even as an overall food gauge tumbled 14 percent from a record, United Nations data show.
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