Beef prices, and production, are rising

With Helena Bottemiller Evich, Doug Palmer, Sarah Ferris and Maya Parthasarathy

A RECOVERY IN BEEF PRICES: After a few financially wrenching years for the cattle industry, prices and production seem to be improving. A Pro Ag article today details how strong these numbers have become: In November, retail prices rose 1 percent, and wholesale prices per 100 weight jumped 12.7 percent.

Projections show that consumers are expected to eat, on average, 56.6 pounds of beef by the end of 2017, up from 55.4 pounds the year before. All these figures are estimates by Derrell S. Peel, Oklahoma State University’s Breedlove professor of agribusiness, who spoke with yours truly about the trends.

Something for everyone: Rising prices also seem to be helping all parts of the cattle industry, including cow-calf producers, feeders, packers and distributors. “We lost a lot of money in 2015 and 2016,” said Craig Uden, a Nebraska cattleman who also owns a feed yard and is the departing president of the National Cattlemen’s Beef Association. “This year, everybody is making a little money.”

A few bad years: Much of the last 18 years have been rough for cattle operations, Peel said. “The bottom line was we were getting smaller,” he said.

Then, just as the industry seemed to have adjusted, a major drought in 2011 and 2012 spread mainly through Texas and Oklahoma forced the industry to slaughter cattle it could no longer care for. By 2015, Peel noted, beef production dropped to its lowest level since 1993. Prices started rising in 2016, but the industry wasn’t rushing back.

“We had not gone through an expansion and an increase in beef production like this in 20 years,” said Peel. “So the industry was really nervous about how bigger beef supplies were going to impact the market.”

Still a tough industry: Many ranchers, especially younger ones, still have a lot of catching up to do. Colter DeVries, left his job in banking in December 2014 to start a ranching business. But the first two years were especially rough.

DeVries, who has 185 cattle over the 8,000 acres he leases near Billings, Mont., said he had a long way to go. “I’m still so far under water and I can barely pay back my operating line of credit,” he said.

Read more here…

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