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Cattle Prices Hit an All-Time High
According to the Wall Street Journal, cattle futures and cattle prices have hit all time highs. At the Chicago Mercantile Exchange, cattle futures rose half of a percent for February, pricing beef at $1.4015 per pound. The United States Department of Agriculture reported that Choice beef prices hit an all-time record of $227.52 per hundred pounds (cwt) and Select beef prices rose to $224.46.
Have you been negatively affected by the price of beef in the supermarket?
Cattle Production at an All Time Low
According to NBC Business News, the total cattle supply has reached an all-time low due to the three year drought. The rise in feed such as corn has played a significant factor. Most ranchers are now in the herd rebuilding stage where they are hanging onto their cattle longer. That, combined with a decrease in multiple births have reduced the nation's supply of beef.
Good for Ranchers?
On one hand, it's a great time for ranchers who are selling their beef, but bad for consumers who are facing sticker shock at the grocery store. Consumers are switching to lower priced cuts of beef as well as switching to cheaper meats such as pork and chicken. This may ultimately harm the beef industry as consumers choose to steer away from what they see as higher cost and even luxury foods.
...it's a great time for ranchers who are selling their beef, but bad for consumers who are facing sticker shock at the grocery store...
Beef Taking a Hit Due to Bad Press
Demand for beef in the United States has already dropped, due to bad press. People are switching to what they perceive is a healthy lifestyle which includes less beef. Problems with contaminated meat coming from certain processing plant combined with media reporting about "pink slime" has steered consumers away from beef. Even reports about horse meat being found in other countries' prepared foods have caused consternation in the United States over the legitimacy of the current meat.
China is one of the fastest growing markets for beef, according to NBC News. Current trade agreements such as the Trans-Pacific Partnership Agreement will make it easier for ranchers to ship their cattle oversees. As the United States market proves lackluster, it's likely ranchers will see other markets come online. The bad news (or good news, depending on how you look at it), is that according to Andrew Peel, an agricultural economist from the University of Oklahoma, the United States cattle supply won't return to pre-drought numbers until 2017. Until then, it's likely cattle prices will continue to stay high.