Cattle prices have started to moderate after reaching unexplained record highs in the first four months of the year, says Purdue Extension agricultural economist Chris Hurt.
He believes that the highest prices of the year are now likely in the past.
In the first quarter of 2014, Nebraska steers sold at an average price of $147 per live hundredweight - more than $20 higher than the previous first-quarter record price. Nationally, finished cattle prices were up 17 percent during the first quarter. With production only down 4 percent, the hike has been somewhat unexplained.
"It was not so surprising to have record-high cattle prices, but the real surprise was the lofty heights of those new records," Hurt said.
While there are a few factors that could have played into higher prices, Hurt said none of them seem to have been big enough to force prices to the levels they reached.
Some of those include overall low meat and poultry supplies, reduced beef production, low broiler egg hatchability and expected reduction in pork availability from the porcine epidemic diarrhea virus.
"PEDv in hogs may have been the real kicker, primarily because the pork market appears to have sharply overshot prices due to the uncertainty of the actual death loss from the disease," Hurt said. "Much like pork, we are left with an incomplete understanding of why cattle prices were so high, especially in March and April.
"Like in the pork sector, this may mean that cattle prices were caught up in the fear of very short meat and poultry supplies and may have become overpriced."
The high cattle prices translated to higher retail beef prices for consumers. The per-pound retail beef price average hit a record $5.55 in the first quarter of 2014 and is expected to be $5.67 for all of 2014. That's a 7 percent increase over the 2013 average of $5.29 per pound.
Live cattle prices have started to come down a bit, however, and Hurt said the moderation should continue. Finished cattle prices are expected to move to the mid- to low-$140s per live hundredweight in May and June, range between $135 and $139 in the third quarter, then bounce back to the low- to mid- $140s for the last quarter.
The average price per live hundredweight last year of $126 is expected to be near $142 for 2014.
Higher cattle prices could ultimately lead producers to consider growing their operations, Hurt said.