The drought in the western states is forcing many ranchers to slaughter their cattle early, at the same time there is a slump in U.S. beef exports. As a result USDA has been forced to continue to revise its estimate of 2002 U.S. beef production. USDA is now expecting meat production will be up 2.3 percent this year.

In June, USDA’s monthly world supply and demand report pegged U.S. beef production for 2002 would total 26.52 billion pounds. Six months earlier, USDA predicted beef production would be flat at 25.51 billion pounds.

This has caused cattle prices to drop, but those prices haven’t made their way to the consumer. April’s average beef price across all cuts was $3.06 per pound- just 2 cents off the record-high, which came in February of this year.

Higher retail beef prices make pork an attractive alternative. Especially since pork has had to compete with large supplies of cheap chicken. Still, if beef supplies continue to be large, it’s only a matter of time until stores start running specials on beef and retail prices drop. That spell even stiffer competition for pork in the grocery store.