April 5, 2013

US beef prices will rise as drought continues

As drought continues to hold cattle numbers down in the country, the US cattle inventory of 89.3 million head remains at its lowest level since Dwight Eisenhower was president, but the demand for beef continues to climb.

A story in the Des Moines Register recently quoted Ed Greiman, president of Iowa Cattlemen's Association, saying he expects beef prices could increase as much as 10% by summer. Greiman said cattle producers are worried beef might become a luxury item.

In addition to drought, rising energy costs for processing, packaging and transportation have driven modest increases in retail food prices. Retail beef prices have risen by about US$1 per pound since 2007.

Prices for cattle have jumped by as much as 25% in the past two years as herd counts have dropped.

In the Midwest, higher corn prices and late winter storms have driven beef prices higher. With fewer cattle coming to market in West Texas, several slaughter and meat-processing plants have closed.

The closure of Cargill's beef packing plant in Plainview in February will impact beef prices for the consumer, Agriculture Commissioner Todd Staples said at the San Angelo Chamber of Commerce luncheon last month.

Last week, San Angelo Packing Co., 1809 N. Bell St., closed. Also because of the drought, cattle runs were too light to fill the 350-400 head processed daily. Before the drought, the plant processed about 700 head per day.