‘Out-of-Sight’ Beef Prices Pose Opportunity

July 8, 2014 09:29 AM
‘Out-of-Sight’ Beef Prices Pose Opportunity

Cattle prices as well as wholesale and retail beef prices are setting record highs, according to Texas A&M AgriLife Extension Service economists. The high prices could pose an opportunity for some producers where there’s been relief from the drought.

By Robert Burns, Texas A&M AgriLife Extension Service

COLLEGE STATION — Record high cattle and beef prices are actually making rebuilding herds a good bet, at least for some beef cattle producers, according to a Texas A&M AgriLife Extension Service expert.

"’Out-of-sight’ is a good term for the prices," said Dr. David Anderson, AgriLife Extension specialist in livestock and food products marketing. "And it doesn’t really matter whether we’re talking about retail prices to consumers, the wholesale beef market or at sale barns for calves and feeder steers."

Both choice and select wholesale prices continue to set new record highs, with choice taking more than $248 per hundredweight, according to Anderson.

"We sold fed cattle last week in the Panhandle at $158 per hundredweight," he said. "Lightweight calves were selling roughly at $2.75 per pound, and 750-pound feeder steers at $2.15 to $2.20."
But contrary to what might be thought—that the high prices for calves and replacement heifers would discourage herd rebuilding—the out-of-sight, across-the-board record prices are encouraging rebuilding herds in some areas, Anderson said.

This is because while there has been relief from the drought in some beef-producing areas, there hasn’t been in others, Anderson explained. The fickleness of the drought, coupled with historically low beef cattle inventories, is making rebuilding herds a good investment – even with record-high prices.

The high prices for wholesale beef, and the prospect that they aren’t going to go down anytime soon, creates a good opportunity for those who have been getting rain, he said.

"We still have significant areas both in the state and the U.S. that are still drought affected, who still aren’t able to really start that rebuilding process," Anderson said. "But in areas where there’s been enough rainfall and there is enough grass, then I think we’ve got some attempts at rebuilding herds underway already."

To help producers work out the economics of rebuilding beef cattle herds, Anderson has PDF and spreadsheet files available online at: http://agecoext.tamu.edu/. Click on "Resources," then "Software."

More information on the current Texas drought and wildfire alerts can be found on the AgriLife Extension Agricultural Drought Task Force website at http://agrilife.tamu.edu/drought/.

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