March 22, 2007

Rising cattle prices poses challenge to US meat producers
 

High feed costs and harsh winter weather have pushed cattle prices up almost 14 percent since March 2006 according to the US Department of Agriculture and analysts fear meat producers would face a lean summer season this year.

Economists have blamed the skyrocketing demand of corn as a major factor in hiking cattle prices. The Bureau of Labor statistics data show that corn prices are up more than 90 percent from the same time last year, owing mainly to demand for ethanol. Corn is now selling at more than US$3 per bushel, compared with last year's average price of US$2 per bushel.

The concern is that as feed prices rise, farmers will place less and less cattle in feed yards, thereby diminishing production levels and driving prices up, experts said.