Is meat outpacing wheat?

Beef and dairy protein prices recently went through the roof, while grain prices are in the doldrums. In this Commentary, Forbes Elworthy explores why “meat is outpacing wheat”, and wonders how long this may continue?

How are wheat prices doing?

In theory, farmers respond to changing relative prices by reallocating land among crops, so that commodity prices track each other over time. When wheat became constrained after Russia’s invasion of Ukraine, high prices led farmers to take land out of other crops and grow more wheat. This happened in 2022: farmers sowed less corn and more wheat, helping restore stocks and allowing prices to normalise.

Figure 1 illustrates this adjustment. Global wheat prices peaked in 2022 at around three times their 2010 levels. Since then, prices have subsequently tracked down to now only 20% above 2010.

Figure 1: Beef vs Wheat 2010-2026 Indexed

Source: Federal Reserve Bank of St Louis

What are the prospects for grain supply?

Arable farmers currently face plenty of challenges, including record temperatures in Europe (Financial Times 22 July 2026) and a Middle East war that has boosted fertiliser prices, lifting production costs. In the United States, arable farm input costs have risen 65% since 2010, even as grain prices are up only 20%. Despite this, grain stocks are expected to remain abundant, see Figure 2 below.

Figure 2: FAO estimates of global grain inventories 2020-2030

Source: FAO

The resilience of arable agriculture in the face of low prices and high costs is an economic anomaly.

Why is grain so abundant? Might farm subsidies be one explanation? In the face of low prices, farmers, along with machinery and chemical suppliers, have lobbied for taxpayer support. Cash payments, subsidised finance and crop insurance schemes help growers maintain production even when market returns are under pressure. The normal rule that “low prices are the cure for low prices” is not working. Grain farmers may be caught in a “doom loop” of low prices, subsidies, over-production, lower prices, and so pressure for more subsidies.

A further factor boosting grain production is the need for both Ukraine and Russia to earn export dollars in the food market. At any price both parties require foreign exchange. Normally we see a reduction in Black Sea planted area and so grain production when prices fall. But not in time of war.

What about beef prices?

Global beef prices had a brief price surge in 2014 after a mid-western drought created shortages of feed corn, constraining beef supply. As Figure 1 shows, from 2014 until 2021, beef and wheat were well-aligned.

Yet, suddenly over the past two and a half years, beef prices have surged to almost 150% above those of 2010, and red meat farmers everywhere have smiles on their faces. Farmers are making terrific profits on beef and sheep acreage, even as our arable cousins are hurting.

Supply of protein foods

In contrast to grains, a key factor in the protein price surge has been restricted supply. Droughts in United States cattle-producing regions have reduced the North American cattle herd, already in a 50-year decline, to a level not seen since 1965 (Figure 3).

Figure 3: Beef cow inventory, United States January 2026 inventory: 27,607,200 head

Source: National Agricultural Statistics Service (NASS) of USDA

It is not just beef that has seen tight supply. In the dairy industry, European and New Zealand environmental restrictions have constrained the production of milk and its products.

Demand for animal protein

On the demand side, keto style diets are leading many to eat more proteins, and to eschew carbohydrates and sugars.

The rapid adoption of GLP-1 weight-loss drugs has raised awareness of protein’s importance, as doctors encourage users to prioritise high-quality protein for their reduced food intake.

Meanwhile, in the United States, politicians and food service chains have joined diet advisors in weighing in, with Robert Kennedy urging restauranteurs to cook in beef tallow, and McDonalds USA replacing margarine with butter for some breakfast items like McMuffins and eggs.

It may not be a coincidence that, since GLP-1 drugs went mainstream in 2023, beef prices have risen over 50%. Market traders are telling us they are facing a global shortage of protein. They tell us they could sell a lot more premium, grass-fed New Zealand beef, lamb and venison, if we could only supply it.

What about dairy protein?

Beef is not the only protein that is outperforming. Probably the best performer of all proteins has been dairy whey protein, up 400%, see Figure 4.

Figures 4: Price of whey protein concentration from 2020-2026

Source: Fonterra

Growing consumer interest in health, fitness and healthy ageing has increased demand for dairy protein ingredients and supplements. Once largely confined to athletes and bodybuilders, whey protein has entered the mainstream as consumers increasingly prioritise protein for muscle maintenance, weight management and overall wellbeing.

Such has been the growth in demand for whey protein that the dairy industry is now contemplating cheese becoming a by-product of whey. For hundreds of years the reverse was the case.

How long will high protein prices last?

Food staple prices are typically driven more by shifts in supply than demand: consumers buy much the same amount of bread, chapatis or rice regardless of price. Beef has traditionally behaved the same way, with prices moving on droughts or herd size rather than demand. If that still holds, today’s high protein prices should normalise as farmers lift production¹. But the growing popularity of high-protein diets suggests demand itself has shifted, pushing protein into a more discretionary category – which could prolong the boom.

1 Wearables such as Halter are just some of many technologies the beef industry is adopting. Possibly even more important will be increased numbers of calves born to dairy cows but raised for beef production.

What cars do farmers drive?

This reversal of fortune is very recent. This summer in France, an agricultural college professor told me her arable students drive better cars and dress more smartly than beef and dairy farmers’ children, who look a touch shabby. For 20 or 30 years, grain farmers benefited from mechanisation and policy support, and it showed in their kids’ education and appearance. Her question: how long before livestock farming’s new-found prosperity affects farmers’ production (and wardrobes)? Might it take another decade?

Conclusion: Will meat continue to outpace wheat?

Whether the current out-performance of meat vs wheat is temporary or structural remains to be seen. The United States beef herd is unlikely to be rebuilt for some time in the face of on-going droughts in the United States west and south. Meanwhile health and nutrition trends favouring increased consumption of high-quality protein show few signs of reversing. If this is right, then the current price out-performance of beef and dairy protein may persist.

In response, farmers in unsubsidised regions, like New Zealand, are naturally expanding livestock operations and investing in fewer arable acres. In the long run, these behaviours may rebalance the pricing relationships of wheat, beef and dairy.

However, there are not many parts of world agriculture that are truly free market. Since government incentives tend to lock in the status quo, might this prolong the period during which grain production is abundant, so that protein remains “the place to be”?

 

If you have any questions about the report or any other farming matter, please contact us at the email addresses below.

Forbes Elworthy
Founder
forbes.elworthy@craigmore.com

Che Charteris
CEO
che.charteris@craigmore.com

Nick Tapp
Chairman CS LLP
nick.tapp@craigmore.com