U.S. cattle and beef prices should set more record highs this year as the worst drought in half a century, which wilted pastures and drove up feed costs, forced producers to trim the nation’s herd to the smallest since 1952, according to industry marketing and analytics firm Cattlefax.
Prices for fed cattle could average $126 per cwt, up $3 from last year, which would be a fourth consecutive yearly increase, Cattlefax CEO Randy Blach said during a Feb. 8 session at the National Cattlemen’s Beef Association annual meeting.
“We’ll see record-high fed-cattle prices at some point here in the spring where we’ll see the market top the $130 level of last year,” said Blach.
That forecast is based on more declines in cattle herds due to the drought in the southwestern United States, a seasonal decline in slaughter-ready cattle during the spring and stronger beef exports.
Shoppers can expect record-high beef prices in 2013, with the retail price seen on average at $4.85 per lb., up four per cent from 2012, said Blach.
Retail prices hit a record high of $5.15 per lb. in November before easing to $5.11 last month, according to USDA.
If beef prices are to come down, feed and hay costs will have to decline to encourage producers to expand.
“We’ve got to see expansion of the herd. If we were to start expanding tomorrow, we’re 30 months down the road before we can really impact production. So, prices are going to stay elevated for quite some time until we can respond to Mother Nature’s signal to regrow the herd,” said Blach.