June 2, 2004

 

 

US Beef Prices Up On Strong Demand, Limited Supply
 

A lack of cattle exports from Canada combined with a high demand for beef are still causing beef prices to rise.

 

In Idaho, red meat production at packing plants totaled 34.5 million pounds, down 27 percent from last year, and down from March's 43.2 million pounds, according to the Idaho Agricultural Statistics Service.

 

The September closure of Simplot's meat packing plant in Nampa, and a reduction in processing at Armour's Nampa plant could be factors.

 

But the discovery of mad cow disease in a Canadian cow, resulting in the United States banning Canadian imports, has been one of the biggest factors, said agricultural statistician Michelle Conn.

 

Idaho Cattleman's Association Executive Director Lloyd Knight agrees.

 

"There's just less cattle out there," he said.

 

The drought has also caused changes in beef production. With the drought limiting cattle numbers, prices have risen, but some ranchers have still struggled.

 

"Obviously, it's a challenge for those wanting to expand their herds in a good market situation," Knight said. "It's kind of a double-edged sword."

 

The short cattle supply has coupled with an increase in demand over the last several years, in part because of the popularity of low-carbohydrate diets.

 

"Not only is demand higher for beef, people are willing to pay more," Knight said. "They're willing to pay a premium for beef, and that is encouraging."

 

The high demand is good news for people like Dan Hammond, who operates the feedlot at Snake River Cattle Co. in American Falls. Right now, the lot has about 10,000 head of cattle.

 

The cattle industry runs in seven- to 10-year cycles, Hammond and other cattle experts said, because as prices increase, ranchers expand their herds and sell more cattle, eventually bringing prices back down again.

 

For now, however, the combination of high demand and low supplies due to the closed borders is causing a unique peak in the market.

 

"We're very optimistic in the cattle industry that prices will remain high," Hammond said.

 

Grace rancher Grant Williams has been ranching for 50 years, and has seen the industry's ups and downs.

 

"It just goes in cycles," he said. "We anticipate good prices for a few years; then it will go the other way."