Record beef prices a boon for farmers, bane for shoppers
Jerry Hess has been working behind the meat counter at Carlsons’ Grocery Store for nearly 25 years, and he can’t recall seeing beef prices like the ones customers have seen in recent months.
“Within the last year or two it’s really raised,” Hess said. “It’s kind of leveled out for now.”
Hess said the per pound price of a typical Kansas City strip steak has gone from $8.99 last year to $10.99 currently, and that consumers are changing their buying habits as a result.
“Some of the steak prices are way high, so they’re slowing down on the steak sales and going up on the cheaper cuts,” Hess said. “The cheaper cuts are becoming more popular because it’s forcing them to buy those. A lot of the cheaper steaks I’m having a hard time keeping up with right now.”
Local markets are experiencing the same trend felt nationally — beef costs more. The U.S. Department of Agriculture livestock summary for Sept. 17 reported all-time highs for the average prices of choice cuts and for all beef in general.
Marion County Extension Agent Ricky Roberts said high prices are tied to supply and demand. Cattle stocks are low, so prices paid for cattle are exceptionally good right now.
“I’m not sure there’s ever been a better time to own a cow than today,” Roberts said. “They’re valuable. Calves are crazy valuable.”
Bill Mathias, manager of Herington Livestock Commission, said prices have gone up significantly when comparing 2013 and 2014 September month-end sales.
Mathias had a lot of 118 feeder steers in 2013 that averaged 778 lbs. each that sold for $168.85 per hundredweight in 2013. This year, a lot of 93 feeder steers averaging 760 lbs. sold for $240 per hundredweight. For the comparison sales Mathias provided, prices paid per hundredweight have increased an average of $73 this year over last. Other categories of cattle can bring more.
“Steer and heifer calves averaging around 500 to 550 pounds are $80 to $100 higher,” Mathias said. “Instead of a 500-pound heifer bringing $150-160, she’s bringing $240.”
Roberts and Mathias are in accord when offering explanations as to why beef prices have hit record levels.
“If you trace back to about three years ago we had a severe drought across a wide chunk of the country,” Roberts said. “It got so severe we had to start killing cows. In the cattle cycle, when you start killing females, it takes time to build the cow herd back up.”
Mathias traced the effects of draught on reducing herd sizes even earlier.
“The drought started in 2003 in Colorado, and it’s been somewhere ever since,” Mathias. “It’s been the effect on the breeding stock numbers, they’re way down.”
Another reason given by both for higher prices is the cheap cost of feed due to lower corn prices.
“A few years ago corn was $7.50 to $8,” Mathias said. “Now it’s listed at $3.25.”
“They’ve been dealing with $5 to $6 dollar corn, and that’s too much if you’re having to feed cattle,” Roberts said. “Corn has cheapened up from that, and because corn is cheap enough they can pay more for calves.”
While some ranchers produce their own calves and fatten cattle through grazing, others buy calves and feed their cattle, and Roberts said lower grain prices have been a boost to the latter group.
“They’ve had a lot of hard times, they’ve bled a bunch,” Roberts said. “They’re making money for different reason — that’s because corn has cheapened up.”
Mathias said the demand for feeders has kept business brisk at the livestock commission sales.
“We don’t have to have special feeder sales, we sell feeders every week in load lots,” Mathias said. “Haven’t had any problems for getting buyers to come, either. We have the buyers for the four big corporations here every week.”
Roberts said he couldn’t predict which direction beef prices would go in the short term, but he said at some point prices will start to fall.
“When we get our numbers back up, we’ll be killing more beef, and more will be on the market. If the demand doesn’t increase with the supply, you’ll see downward pressure on the price of meat,” he said. “This thing is cyclical to a point, and it’s good times in the livestock industry, but how long it will last?”
Hess said when prices come down that he expects people to return to buying the higher-priced choice cuts.
“If prices were to go back down it would pretty much go back to the way it was,” Hess said. “It’s hard to beat a rib eye and steaks like that.”
Last modified Oct. 8, 2014