Cattle futures have climbed to their highest prices on record as drought conditions in the southwestern United States devastated the animals’ feeding...
Cattle futures have climbed to their highest prices on record as drought conditions in the southwestern United States devastated the animals’ feeding grounds, contributing to a drop in the size of the domestic cattle herd to its smallest in eight years.
The drought in the Southern Plains meant that there was less grass for the cattle to feed on, said David Maloni, president of foodservice supply chain consultancy Datum FS. Cattle supplies have fallen about 5% since peaking in 2019 due to “poor pasture conditions caused by drought, elevated feed costs, and poor margins.”
August live cattle settled Wednesday at an all-time high of 175.5 cents a pound based on data as far back as November 1964, with prices up roughly 11% year to date.The high prices are a reflection of tighter supplies as well as “continued exceptionally strong demand for beef,” said Lance Zimmerman, Rabobank senior beef analyst, adding that the strength in consumer beef demand appears to have “caught futures market participants by surprise.
From January to April 2022, wholesale beef demand marked a 30-year high and while indexes tracked by Rabobank suggest demand through the same period this year is 8% softer, that still ranks as the second-highest demand from January to April, he said. However, as moisture enters these states, the upstream cow and calf producers will want to retain female animals for breeding and as that “scenario hastens, we believe that the supply of feeder cattle will contract and push both live and feeder cattle prices higher,” said Kunisch.
Retail beef At the retail level, consumer beef prices have been trending “steady to lower” since the record high prices at $7.55 a pound established during the COVID-19 pandemic in October 2021, Rabobank’s Zimmerman.
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