Beef Demand

Charlsie) Can you take the time and tell listeners how the demand has been going so far? (Gary) Well meat demand is really an important part of the equation for cattle prices. Consumers have through the 1980’s sort of reduced their demand for the product. We saw subsequent declines in prices over those years. But in the last decade or so, beef demand has increased moderately but steadily, which has really helped on the cattle side. But for increasing cattle prices in the last couple of years, we’ve seen record calf prices and fed cattle prices as well. And what we’ve seen both worldwide and in the U.S. is substantial declines in the case of the U.S. of cattle numbers and beef production. Not to the point of any real dramatic effects, but we’re getting to the point where we just don’t have as much beef to go around. And the question becomes, if that has caused high prices, historically high prices have also encouraged more production. That’s what we want from a market system. That’s the way market systems work. That’s the signal to produce more. I think that we’re gonna rebuild herds a little, but I really think that we’re gonna see some pretty strong prices for a long time to come because of some of those factors. We have sort of come out of this long period of time where we’ve had a cattle cycle, where every 10 to 12 years, we’ve had peaks or troughs in inventory numbers. I think we’re going to see a much flatter cattle cycle from now on. I think we’re gonna see producers who are in this market, they’re gonna be in the market. The reality of it is I think we’re in a situation because of labor cost because of feed cost, because of grass, that we’re probably going to be hovering around this $2 a pound figure for many years to come. As opposed to $1 or $1.25. I just believe costs have risen enough that that’s where we’re gonna be for the long term. And that’s a real positive thing for the cow/calf producer. And it’s very positive for the industry as well.

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