Area cow-calf producers are profiting from the demand for beef around the world, especially the high-quality beef produced by American ranchers.
Tracy Brunner, manager of Cow Camp Feedyard at Ramona, said there were several reasons for the increasingly scarce supplies of feeder cattle. He said rapidly increasing feed and fuel costs have discouraged production. In addition, because of high prices for corn and soybeans, farmers have shifted grazing land into crop production.
At the same time, he said, there is steadily increasing demand for beef worldwide due to expanding economies and higher incomes in developing nations.
Beef exports set a new record in October. “Beef” magazine reported that the value of beef exports was 37 percent higher in the first 10 months of 2011 compared to the same period in 2010.
Brunner said beef exports are important because cultures in other parts of the world pay big money for beef parts with little value in the U.S., such as the heart, tongue, liver, and stomach.
Weather has also factored into the supply-demand situation. Severe drought in southern and western areas of the Midwest caused ranchers to liquidate cattle. Some weathermen predict a continuation of the drought this year, which would lead to further liquidation.
“Beef” magazine reported that the beef cow inventory on Jan. 1 was 35 percent lower than a year ago. It is the smallest herd since the early 1960s.
With shrinking cowherds, supplies of fed cattle are expected to become scarce in 2012 and to remain that way for several years. A 3 to 4 percent decrease in beef production is expected.
According to statistics provided by the U.S. Dept. of Agriculture, beef produced in 2010 totaled 26,304 million pounds. In 2011, 26,277 million pounds were produced. The estimate for 2012 production is 24,960 million pounds.
Market prices for feeder steers averaged $109 per 100 pounds in 2010 and $132 per 100 pounds in 2011. Prices are expected to be in the $137 to $143 range this year.
For people like Brunner who have to buy high-priced feeder calves for the family’s feedlot, the challenge is to participate in a competitive market and still make a profit. He hopes high calf prices will encourage cow-calf producers to expand their herds.
“The cow-calf producer is in the best position right now,” he said.