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What's sizzling this summer: Beef prices

As the summer grilling season swings into high-gear, a "perfect storm" of events, both natural and man-made, is expected to keep cattle and beef prices higher for the foreseeable future.

The ongoing drought, now in its third year in some key cattle-producing states, has reduced the overall U.S. cattle herd to its smallest size in over 60 years. And while modern cattle are larger and produce more beef than in previous decades, 43 percent of the U.S. cattle inventory is located in drought-affected areas.

In California, where drought conditions in some parts of the state have reached historic levels, the price of hay has doubled. "We have had to reduce our livestock by 90 percent because of a lack of food," Stan Van Vleck, with the Van Vleck Ranch outside of Sacramento, told CBS Station KOVR.

What's more, U.S. Department of Agriculture data quoted by the Fort Worth Business Press noted the number of cattle slaughtered so far this year is down 6.3 percent, compared to to 2013. And cattle futures reached a record high last week.

The drought is also forcing a geographic shift in the nation's beef belt. NET News/Harvest Public Media reported that, for the first time, Nebraska has surpassed Texas as the nation's top cattle-feeding state because many ranchers are moving their herds out of drought-stricken regions and northward into Montana, the Dakotas, Nebraska and Iowa. Some experts believe that shift may end up becoming permanent, even after the drought ends.

That's primarily because those states have ample access to distillers' grains, a byproduct of corn ethanol production that's used in cattle feed and is in ready supply in corn-producing Midwestern states.

"So that's a big deal," cattle feeder Terry Van Housen told NET News. "A lot of this stuff, if you fed in Texas, it would have to come from here."

Rising beef prices also mean a large number of beef-producing states are seeing a spike in cattle rustling, which also affects prices. The smaller national cattle herd makes the animals more valuable as demand exceeds supply and especially as global demand for beef, pork and other meats rises.

Ann Wittmann, executive director of the Wyoming Beef Council, told the Wyoming Tribune Eagle that calves in her state are now fetching up to three times their price compared to 14 years ago.

"We're talking about a calf, somewhere between 50 and 100 pounds, is ranging from $320 to $375," Wittmann said. "If we go back to 2000, the price was just under $100."

In Oklahoma, a record 830 cases of cattle theft were reported last year, and those numbers don't appear to be declining.

"This is the highest I've ever seen it," Richard Gebhart, president of the Oklahoma Cattlemen's Association told The Oklahoman in April. "It is a horrendous deal and everyone is trying to double down on their efforts to prevent it."

Beef isn't the only meat to recently hit new highs in price. A viral epidemic that has been killing off young pigs, has also driven pork prices sharply higher. U.S. inventories for chicken are also under pressure as Americans seek out less expensive sources of protein.

The author previously worked in the communications department of the National Cattlemen's Beef Association, but is no longer involved in the beef industry.

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