News Column

WINDMILL COUNTRY: Higher meat prices expected to remain

June 24, 2014

By Jerry Lackey, San Angelo Standard-Times, Texas



June 24--SAN ANGELO, Texas -- Cattle sold higher at Producers Livestock Auction on Thursday with calves and yearlings $4 to $6 higher and slaughter cows and bulls bringing from $1 to $2 higher. A total of 1,168 head sold in a one-day sale.

Recent rains have slowed cattle coming to market from the country, but only time will tell if it's a sign producers are holding back young heifers for expansion of their herds. Cattle inventory remains at the lowest level since the early 1950s.

Feeder cattle prices are at historic levels at midyear, and many producers are asking what to expect in the second half of the year, said Derrell S. Peel, Oklahoma State University Extension specialist.

"So far, 2014 has been in sharp contrast to the first half of 2013," he said. "About a year ago, feeder prices bottomed counter-seasonally in late May, early June. Feeder prices today are 50 percent or more above this time last year.

"Feed prices are currently about 24 percent higher than one year ago, and choice boxed beef is roughly 15 percent above the $200 per hundred weight levels that it first achieved one year ago," Peel said. "It was just about a year ago that feeder prices began the increases and has continued to now."

Writing in the Cattle Trader Center newsletter, Peel said many factors are quite different between the first half of 2014 compared with the first half of 2013. Most notably is the change in feed prices. Feedlot cost of grain reached record levels, while corn prices made dramatic changes. Feedlot losses were severe, and some feedlots allowed inventories to drop until late summer.

"So far 2014 has been very different. For one thing we are a year later with an even smaller herd and calf crop this year," Peel said. "Secondly, though drought conditions persist in some regions, larger hay supplies and improved forage conditions in other regions suggest that heifer retention and herd expansion are underway."

Cattle and calves on feed for slaughter market in Texas feedlots with capacity of 1,000 head or more totaled 2.55 million head June 1, down 3 percent from a year ago. Producers placed 580,000 head in commercial feedlots during May.

According to the National Agricultural Statistics Texas Field Office, there were 2.24 million head of cattle and calves on feed in the Northern High Plains, 88 percent of the state's total.

Cattle and calves on feed for slaughter market in the United States in feedlots with a capacity of 1,000 head or more totaled 10.6 million head June 1, down 2 percent from a year ago.

Meanwhile, short supply and increased demand will continue to drive prices higher for the consumer.

"The ongoing drought has the nation's cow herd at its lowest numbers since the 1950s, and hog farmers are fighting a virus that has reduced total pig numbers," said Texas Farm Bureau President Kenneth Dierschke, of San Angelo. "But Texas ranchers are working to rebuild their herds, and hog farmers have modified their management practices to improve production."

Shoppers paid more for meat -- especially pork -- in the second quarter of 2014, according to the TFB Grocery Price Watch. Pork chops increased 6.82 percent to $4.54 per pound, ground beef prices rose to $4.09 per pound, and top sirloin steak jumped to $5.96 per pound.

Consumers are causing the spike in meat prices, said Bob Young, chief economist at the American Farm Bureau Federation.

"Consumers are feeling better about themselves and their income situation and are willing to pay up for good meat," he said. "There aren't enough fancy cuts of meat to satisfy all the people who want them, which means grocery stores can hike up prices.

"I think that given the stronger demand, folks are going to find not quite the cut they want for the price they want," Young said. "They might have to down-market a bit."

He said the high prices don't seem to be just a hiccup in the market.

"Meat consumers should expect this price jump to be the norm for potentially three years," Young said. "It takes a long time for beef production to turn around. You're talking 18 months before the calf is ready to breed, then seven or eight months before she delivers."

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(c)2014 the San Angelo Standard-Times (San Angelo, Texas)

Visit the San Angelo Standard-Times (San Angelo, Texas) at www.gosanangelo.com

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Source: San Angelo Standard-Times (TX)


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