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Chicago Tribune
a day ago
- Chicago Tribune
Backyard barbecues beware: Beef prices are soaring in the US
OMAHA, Neb. — Anyone firing up the grill this summer already knows hamburger patties and steaks are expensive, but the latest numbers show prices have climbed to record highs. And experts say consumers shouldn't expect much relief soon either. The average price of a pound of ground beef rose to $6.12 in June, up nearly 12% from a year ago, according to U.S. government data. The average price of all uncooked beef steaks rose 8% to $11.49 per pound. But this is not a recent phenomenon. Beef prices have been steadily rising over the past 20 years because the supply of cattle remains tight while beef remains popular. In fact, the U.S. cattle herd has been steadily shrinking for decades. As of Jan. 1, the U.S. had 86.7 million cattle and calves, down 8% from the most recent peak in 2019. That is the lowest number of cattle since 1951, according to the U.S. Department of Agriculture. Many factors including drought and cattle prices have contributed to that decline. And now the emergence of a pesky parasite in Mexico and the prospect of widespread tariffs may further reduce supply and raise prices. Here's a look at what's causing the price of beef to rise: The American beef industry has gotten better at breeding larger animals, so ranchers can provide the same amount of beef with fewer cattle, said David Anderson, a livestock economist at Texas A&M. Then in 2020, a three-year drought began that dried out pastures and raised the cost of feed for cattle, according to the American Farm Bureau. Drought has continued to be a problem across the West since then, and the price of feed has put more pressure on ranchers who already operate on slim profit margins. In response, many farmers slaughtered more female cattle than usual, which helped beef supplies in the short term but lowered the size of future herds. Lower cattle supplies has raised prices. In recent years cattle prices have soared, so that now animals are selling for thousands of dollars apiece. Recent prices show cattle selling for more than $230 per hundredweight, or hundred pounds. Those higher prices give ranchers more incentive to sell cows now to capture profits instead of hanging onto them for breeding given that prices in the years ahead may decrease, Anderson said. 'For them, the balance is, 'Do I sell that animal now and take this record high check?' Or 'do I keep her to realize her returns over her productive life when she's having calves?'' Anderson said. 'And so it's this balancing act and so far the side that's been winning is to sell her and get the check.' The emergence of a flesh-eating pest in cattle herds in Mexico has put extra pressure on supply because officials cut off all imports of cattle from south of the border last year. Some 4% of the cattle the U.S. feeds to slaughter for beef comes from Mexico. The pest is the New World screwworm fly, and female flies lay eggs in wounds on warm-blooded animals. The larvae that hatch are unusual among flies for feeding on live flesh and fluids instead of dead material. American officials worry that if the fly reaches Texas, its flesh-eating maggots could cause large economic losses as they did decades ago before the U.S. eradicated the pest. Agricultural economist Bernt Nelson with the Farm Bureau said the loss of that many cattle is putting additional pressure on supply that is helping drive prices higher. President Donald Trump's tariffs have yet to have a major impact on beef prices but they could be another factor that drives prices higher because the U.S. imports more than 4 million pounds of beef every year. Much of what is imported is lean beef trimmings that meatpackers mix with fattier beef produced in the U.S. to produce the varieties of ground beef that domestic consumers want. Much of that lean beef comes from Australia and New Zealand that have only seen a 10% tariff, but some of it comes from Brazil where Trump has threatened tariffs as high as 50%. If the tariffs remain in place long-term, meat processors will have to pay higher prices on imported lean beef. It wouldn't be easy for U.S. producers to replace because the country's system is geared toward producing fattier beef known for marbled steaks. It's the height of grilling season and demand in the U.S. for beef remains strong, which Kansas State agricultural economist Glynn Tonsor said will help keep prices higher. If prices remain this high, shoppers will likely start to buy more hamburger meat and fewer steaks, but that doesn't appear to be happening broadly yet — and people also don't seem to be buying chicken or pork instead of beef. Nelson said that recently the drought has eased — allowing pasture conditions to improve — and grain prices are down thanks to the drop in export demand for corn because of the tariffs. Those factors, combined with the high cattle prices might persuade more ranchers to keep their cows and breed them to expand the size of their herds. Even if ranchers decided to raise more cattle to help replace those imports, it would take at least two years to breed and raise them. And it wouldn't be clear if that is happening until later this fall when ranchers typically make those decisions. 'We've still got a lot of barriers in the way to grow this herd,' Nelson said. Just consider that a young farmer who wants to add 25 bred heifers to his herd has to be prepared to spend more than $100,000 at auction at a time when borrowing costs remain high. There is typically a seasonal decline in beef prices as grilling season slows down into the fall, but those price declines are likely to be modest.
CNBC
a day ago
- CNBC
Why Netflix's beat-and-raise quarter is welcome news for Disney investors
Strong earnings from streaming king Netflix on Thursday sets the stage for Disney to shine with its results in a few weeks. Netflix reported an upbeat quarterly results after the bell Thursday, with revenue soaring 16% year over year, its seventh straight quarter of double-digit growth. The streaming service also delivered beats on operating income, earnings per share and free cash flow, and raised its full-year revenue guidance. (Shares were down Friday on Netflix warning that its operating margin would be lower in the second half of 2025). While the results certainly keep Netflix atop the competitive streaming industry, they also provide a good read-through for Disney, which has been hyper-focused on growing its streaming platforms — Disney+, Hulu and ESPN+ -- as its traditional TV business remains challenged. Indeed, Netflix reported "healthy member growth" — Netflix no longer discloses quarterly net member adds — proving consumers are still willing to pay for streaming entertainment. But it also found success with higher pricing for its products and revenue from its new ad-supported services. That higher pricing is welcome news for other streamers, including Disney, which has raised prices for Disney+ ad-supported and ad-free plans, as well as for its bundles which combine Disney+, Hulu and ESPN+. The uptick in ad revenue at Netflix demonstrates that major streaming platforms like Disney+ can raise prices and grow advertising income without losing subscribers, proving that customers are willing to pay up for premium content, and that ad-supported models can help diversify revenue streams. In related news, NBCUniversal's streaming service Peacock just announced Friday that it is raising prices by $3 per month for its ad-supported and ad-free tiers. The price hikes come after a surge in subscribers for the latest season of "Love Island" and in anticipation of its NBA broadcast package beginning this fall. (NBCUniversal is the parent company of CNBC.) Ahead of Disney's third quarter on Aug. 6, UBS estimated double-digit earnings per share growth will continue, buoyed by resilient demand at the company's theme parks and similar improvement in direct-to-consumer profitability. They note concerns that the opening of Universal's Epic theme park in Orlando appear to have been overblown. The analysts raised its price target on Disney stock to $138 a share from $120 earlier this week. After a big move off their April lows, shares have been rangebound as investors wait to hear more about streaming profitability improvements, the strength of its parks and experiences business, and management's plan to mitigate declines in linear TV. The stock is trading roughly 1% lower at $121 per share Friday. Disney is a "show-me stock," Jim Cramer said Thursday on "Squawk on the Street." "People want to see the Disney+ numbers and see that there really is a breakout because there's been so much distrust about anything that's involved with linear [TV]," he said. "No one seems to get their way until they see the numbers. I think the numbers are going to come through and the stock's going to look cheap. I'm a believer." Of course, we don't sacrifice our discipline even when we have faith that Disney will be able to move higher over time. We trimmed our position on June 27 to capitalize on that big run. Now, we're waiting for earnings in a couple weeks for a business update. We maintain our price target of $130 and 2-rating on the stock. (Jim Cramer's Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Chicago Tribune
a day ago
- Chicago Tribune
Bryson DeChambeau lobbies for British Open to return to Trump-owned Turnberry
PORTRUSH, Northern Ireland — Bryson DeChambeau appears to have a good relationship with President Donald Trump, with the pair once enjoying a round of golf that has been watched more than 15 million times on YouTube. Now the two-time major champion is doing some British Open campaigning for him. DeChambeau said Friday he's all for Trump's Turnberry course in Scotland hosting an Open for the first time since 2009. Turnberry has hosted four Opens — in 1977, 1986, 1994 and 2009 — but infrastructure hurdles have kept it from appearing more frequently in the rotation. Trump bought the resort in 2014. 'I look at it as a golf course,' DeChambeau said of the stunning links venue along the Ayrshire coast. 'It's one of the best golf courses in the world, and I'd love for it to be a part of the rotation. 'Albeit I haven't played it, I've heard so many great things about it, and anytime you get to play a special historical golf course like that, I think it's worthy of it, for sure.' Turnberry is still in the R&A's 10-venue Open rotation but isn't playing an active role. It last hosted the Open 16 years ago — before Trump bought the resort — when 59-year-old Tom Watson bogeyed the 72nd hole and lost in a playoff to Stewart Cink. Watson won the first Open at Turnberry 32 years earlier in the famed 'Duel in the Sun' with Jack Nicklaus. Speaking before the Open this week at Royal Portrush, R&A chief executive Mark Darbon said transportation and other issues had to be addressed before Turnberry gets its hands on the oldest major championship again. Darbon said the R&A met with Eric Trump and other leaders of Trump Golf a few months ago regarding the 'big logistical challenges' facing Turnberry and that the talks had been constructive. DeChambeau believes Trump would make Turnberry a special Open venue. 'He'd still probably respect the R&A and what they're trying to accomplish,' DeChambeau said. 'I can't speak on his behalf, but what I can say is knowing him, he'll do his best of a job as he possibly can.' DeChambeau's relationship with Trump is such that he joined him on stage at an election party in Florida in November before Trump was declared president again. DeChambeau also had a round of golf with Trump and some short-game practice on the South Lawn of the White House a few months ago. Around this time last year, they attempted to break 50 off the forward tees at the president's Bedminster Golf Club in New Jersey using a scramble format. It went on YouTube and was a huge success. 'Got like 15 million views or something,' DeChambeau said. 'It was fun.' DeChambeau was speaking after shooting a 6-under 65 in the second round Royal Portrush in a bid to make the cut, having opened with a 78.
