Global demand for beef driving up costs for producers
Generally speaking, “it’s a good time to be in agriculture right now,” said Albemarle County beef cattle producer Carl Tinder, “but you still have to watch your bottom line.”
Tinder chairs the Virginia Farm Bureau Federation Livestock Advisory Committee. “Cattle prices are high,” he said, “but all of our inputs are high too.”
Cattle prices have been up for the past several years and peaked in March, Tinder said. “They’ve come down a little” since then.
During the peak, some feeder calves were selling for more than $2 a pound. A week ago prices averaged $1.25 a pound; they have since have dropped to $1.15.
“The market’s starting to settle a little bit,” which is good, because if the cost is passed along to consumers, they will choose less-expensive protein sources, Tinder said.
All in all, though, it’s been a good year for cattlemen who sold their animals this spring.
“Guys who sold in February, March or April really capitalized on the market prices trending up,” said Robert Mills, vice chairman of the VFBF livestock committee and a cow-calf operator in Pittsylvania County. “We don’t sell until August, so anything can happen.”
Mills said the rise in cattle prices is partly due to global demand for beef.
“It’s a global market now, and the demand for beef is out there and the U.S. is a big exporter, so that’s a good thing,” Mills said. “We can finally make some money or pay off equipment loans. Hopefully the prices will be good for the next few years.”
Tinder agreed. “There are exceptionally strong export markets for the beef industry right now.”
And that trend will continue, said Jonah Bowles, VFBF agriculture market analyst. “If you look at it long term, we expect world population to increase by 50 percent over the next five decades, and they are eating more high-quality beef protein, so demand will continue.”
Even when cattle prices are good, potential events could drive them back down.
For example, Bowles said, the U.S. economy is currently on an upswing, but if it slips back into a recession, consumption of higher-priced beef products will drop, and so will sales.