Cattle markets have been upended, and big meat producers are making 20 times normal margins as beef prices soar

• Soaring beef prices are making big meatpackers fat and happy while smaller players are left with scraps, according the New York Times.
• As restaurants have reopened and with grilling season underway, demand has upended cattle markets.
• Some allege that the four biggest meatpacking companies have colluded keep beef prices high.

Soaring beef prices are making big meatpackers fat and happy while smaller players are left cleaning up the scraps, according to a New York Times story published this week.

As restaurants have reopened and with America's grilling season underway, demand has upended cattle markets. Futures contracts on ready-for-slaughter cattle have shot up 6.6% year-to-date and 27.7% in the last year. Wholesale beef prices are up 40% since March.

Meanwhile, meat-eaters are already paying 5% more for ground beef and 9% for steaks year-on-year, according to NielsenIQ data cited by the Times.

Elevated demand is bringing on new supply. Second-quarter beef production and beef-cow slaughter rates are up year-on-year, 1.6% and 10% respectively, according to a RaboResearch report. That has partially been driven by drought conditions on the west coast, which have encouraged farmers to cull cows early.

Sizzling demand isn't the only factor at play, though. Grocers, smaller ranchers, and some members of Congress are alleging that the four biggest meatpacking companies - three of which are US-based - have colluded to tamp down the beef supply, keeping prices artificially high.

Fat margins are breeding suspicion. Cargill, a meat processor and America's largest private company, is making as much as 20 times normal profit margins per cattle head, according to RaboResearch. Even compared to past periods of pricey beef, Cargill's margins are still elevated by a factor of six.

One Montana-based small-time rancher told the Times he hasn't turned a profit in four years - and he blames the big meatpackers. He, like other critics, believes beef supply is being manipulated, likely as a result of non-transparent practices and consolidation in the meat-processing industry.

Antitrust pressure is growing, including from a DOJ probe of the meatpackers' potential anticompetitive practices. The "big four" processors - which collectively control 80% of the industry - were subpoenaed in the investigation last year, and this May, a bipartisan group of senators encouraged the DOJ to redouble its efforts.

The big four have shown some signs of investing in supply expansion. US-based National Beef is expanding an Iowa-based plant and Brazil's JBS is investing hundreds of millions in higher wages and more robust facilities, per the Times report.

"We believe our investments in increasing capacity and offering industry-leading wages to attract workers will lead to more opportunities for producers and benefits to consumers," a spokesman for JBS told the Times.