Beef Prices will Remain High Until Herd Numbers Increase

April 2, 2014 03:34 AM
Beef Prices will Remain High Until Herd Numbers Increase

By: Jason Vance, University of Missouri

Record cattle prices have caused a large uptick in beef prices at the grocery store.

University of Missouri Extension agricultural economist Ron Plain says those prices are likely to continue.

Live-weight steers reached $130 per hundredweight for the first time last October. January brought $140 per hundredweight and in February prices cleared $150 for the first time. Those prices were enough to interest cattlemen in expanding their herds.

"Right now we're seeing a reduction in heifer slaughter and a reduction in cow slaughter," Plain says. "That's part of the reason we're setting these records for grocery store prices and live prices for slaughter steers. There is less beef available."

Plain says the beef industry is at the start of a growth period. The question is how long will it last.

"Economics says it should last for a while, but if we get dry weather this summer and short pastures it will be tough to save heifers and expand the cow herd," Plain says. "But if we do get rain, a good hay crop and adequate pasture, we're probably going to save heifers for breeding all year long and do it again next year."

Grain prices have dropped from the historic highs of a few years ago. That also plays a role in the high price of cattle.

"It affects people buying feeder cattle to go into a feedlot," Plain says. "If corn prices are $2 a bushel cheaper, then what feeders can pay to buy young animals is a lot higher. We've seen some very strong prices for feeder cattle in the last five months or so."

Because it is such a slow process to expand cattle numbers, Plain expects live cattle prices and beef prices at the grocery store to remain high. 

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