It appears that there will continue to be some significant opportunities for profits in the beef sector moving forward, but also a battle to maintain consumer demand as prices continue to rise.
Auctioneer Johnny Regula was excited to see the positive prices for cattle producers at United Producers, Inc. in Bucyrus on Jan. 9.
“The top steer was 1,390 pounds at $152.25 and several from $144 to $149.50,” Regula said. “Top Holsteins were at $137.25! I swear, I never thought I would ever see $150 cattle to the packer.”
The prices are moving up so fast that Regula suggested restaurants serving beef will have to start pricing their menus based on “market price” — a strategy typically reserved for lobster and other seafood. Cattle prices are holding strong around the country due to a number of factors.
“In a typical year, fed cattle prices move up from winter to spring, drop sharply in early summer, and rally back in the fall. This pattern described 2012 and 2013 fed cattle markets pretty well as fed cattle prices bottomed both years in mid-summer before moving up considerably by year’s end,” said Kenny Burdine, Livestock Marketing Specialist at the University of Kentucky. “While current feeder cattle markets are largely driven by deferred live cattle futures, the cash fed cattle price does set the tone for the overall cattle complex and affects most all markets. Fed cattle prices have been trading above $130 per hundredweight for most of the fall and spring futures are trading in the upper $130s. In addition to a large corn crop, the strength in fed cattle markets has also supported feeder cattle this year.”
At the end of the month, USDA will release cattle inventory estimates for Jan. 1, 2014, which will be especially important as there were not any mid-year estimates for 2013. Numerous factors have undoubtedly impacted 2013 numbers including drastically lower inventory in many areas coming into 2013, competition for ground from row crops this spring, drought in the Southern Plains this summer, severe blizzard conditions in the Northern Plains this fall, and strengthening cattle prices throughout the year.