The chicken vs. burger dilemma that has been ongoing in QSR for a few years now is likely to intensify this year and next. As milk production begins to expand, there will be fewer slaughter cows and a potentially tighter supply of domestic 90s lean beef trimmings. A 10% tariff on Australian beef 90s further adds to ground beef cost - which is showing no signs of declining over the next 2-to-3 years.

In Friday’s monthly cattle report, the USDA said feedlot inventories on May 1st were 11.38M head, down 1.5% from a year ago. New placements onto feedlots in April were down 2.6% from a year ago and the fewest in 5 years. On May 11, the USDA (again) shut down the southern border to Mexican cattle imports due to an outbreak of “new world screwworm” disease.

Last week’s WASDE report gave the USDA’s first look at 2026. Least surprising was that beef output is headed lower, with a 2.1% drop this year and another 4.8% decline in 2026. Cattle prices are projected to average $214.51/cwt in 2025 and $223.00 in 2026, up from an already record-high $187.12/cwt in 2024.

Income-over-feed costs for dairy farmers were record high in Q4 2024, incenting cow retention and milk production increases that should persist through Q2 2025. Cheese output was up 1.4% year-over-year in March. Rising output and weak domestic demand have helped tame cheese prices.