My View From The Country

Beef Prices Set New Record Highs

The upward march in cattle prices continues, and will for a while.

If the headline looks familiar, it is because it was the same in July. I suspect that it will be a headline that gets reused in the near future as well. 

Retail beef prices rose nearly 4¢ in August to reach $5.394/lb. From a rancher’s perspective, the price increase was especially good news in that the increase went almost 100% to the ranch level. The wholesale to retail, and farm to wholesale spreads continued to narrow slightly, proving yet again that is the producers who hold the leverage in this current market. 

If one is looking for the dark cloud in all the blue sky, there continues to be questions about how high we can push prices before turning customers away. The question now is simply how high can we go? The price spread between beef and its main competitors continues to widen, which isn’t good news, and the overall economic indicators remain dismal, which certainly raises some red flags. While we will continue to see seasonal fluctuations, supplies will remain supportive in general, so the question will be how will the consumer respond as prices continue to rise?

 

You might also like:

8 Surprising Factors That Impact Auction Prices For Beef Calves

BEEF Honors 50 Top Industry Leaders

30+ Photos That Honor Multiple Generations On The Ranch

Latest Commodity Prices

20 Dick Stubler Ranch Life Cartoons To Make Your Day

Discuss this Blog Entry 3

Anonymous (not verified)
on Sep 20, 2013

To answer the question, "how high do beef prices have to go before turning customers away", we are already there. Beef volumes continue to slide on higher retail prices each month. Consumers are more frequently leaving beef on the shelf these days as prices climb higher... just ask your local retailer if he is selling more pounds today than a year ago. More market shocks are on the way... the affordable health care legislation coupled with the fight over food stamps in congress all promise to be bearish on overall demand at retail, and particularly hard on the highest priced protein in the category.

on Sep 20, 2013

It's easy to confuse consumption with demand, but they're not the same. Yes, consumers are buying, and retailers are selling, fewer pounds of retail beef than they did previously. But that's a function of the smaller available supply, not an indicator of less demand.

As long as consumers continue to pay the increasing prices for retail beef, we know that demand is holding together. So far, that's been the case. The question is, how much longer can that continue?

Here's an article that may help explain:
http://beefmagazine.com/beef-demand/what-s-similarity-between-blue-jeans...

Burt Rutherford, Senior Editor

Burke (not verified)
on Sep 20, 2013

Right on, Burt. If we have less to sell, the price will go up, at least a little. The quantity produced will be sold. If the quantity is smaller, the price will be higher. The question is, "How high will it go to ration the supply among the willing buyers?"

Post new comment
or to use your BEEF Magazine ID
What's My View From The Country?

As a fulltime rancher, opinion contribur Troy Marshall brings a unique perspective on how consumer and political trends affect livestock production.

Contributors

Troy Marshall

Troy Marshall is a multi-generational rancher who grew up in Wheatland, WY, and obtained an Equine Science/Animal Science degree from Colorado State University where he competed on both the livestock...

Sponsored Introduction Continue on to (or wait seconds) ×