Beef Supply and Cattle Prices

Typically when prices for finished cattle coming out of U.S. feed yards go up, it’s an indication of a higher demand or shrinking supply of beef. When the supply of beef goes down, the usual thought is that it’s due to smaller numbers of cattle being shipped to the feed yards. In this week’s From The Ground Up, Joe Brown tells us that over the last two months prices have gone up, but it’s not due to less cattle being fed.

“In the last 60 days we’ve seen a pretty big upturn in our live cattle or fat cattle prices. We went from kind of 82 or 3 or 4 cents to 97 or 8 cents.”

Pete Scarmardo is a rancher and cattle buyer, and maintains that the declining beef supply can be explained by the weather, rather than fewer animals being shipped to the feed yards.

“We’ve got the same amount of cattle on feed that we had or maybe just a tad less. With all of the mud and cold weather, those cattle have had more stress, and a lot of the feed that they’ve eaten has gone into just maintaining their body weight, and not putting on extra pounds.”

Scarmardo says most finished animals are 50 to 100 pounds lighter than usual.

“From USDA figures, we’re processing about 600,000 cattle a week. Of those cattle, about 100,000 of them will be cows and bulls, and then the balance of them will be cattle coming out of feed yards.”

That’s 25 to 50 million pounds of beef per week that’s not being processed, but when weather is an issue there are always winners as well as losers.

“With good moisture during the winter months, we’ve got a chance to have a good growing season, and we should be able to maintain our cow herds, ant the cattle should be able to perform. We’ll get our cows bred back, and have things in better shape than we have in a while.”

Scarmardo believes it will take a while for Texas’ cattle herd to expand.

“People are gonna be slower doing it. They’re gonna not be as willing to step out and give a lot of money for stocker cattle and replacement cattle, until they sell a higher dollar calf off of those cows and get money back in the bank and hay in the barn and have grass in the pasture.”

I’m Joe Brown, looking at Brazos Valley agriculture, From The Ground Up.

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