Skinnier cows, higher #prices: Extreme cold's effect on the cattle market

Share on twitter
Share on facebook
Share on linkedin
Share on whatsapp
Share on email

Another day of frigid weather in parts of North America sent cattle prices to a record, but Florida orange groves and U.S. wheat fields were spared from the deadly cold.
 
Cattle futures touched a new high in Chicago on Tuesday as slaughterhouses bid up prices ahead of barbecue season even as the sub-zero temperatures are causing livestock to shed weight and making it tougher to transport the animals to slaughter.
 
The rise in cattle prices could be felt at the grocery checkout, but that depends on consumers’ willingness to pay more, and on retailers’ ability to charge more in a competitive market, said Paul Ferley, a Royal Bank of Canada economist.
 
“That’s the big question,” said Dan Norcini, an independent livestock trader in Idaho. “Can the consumer afford to pay the kind of prices for the beef that the grocers are going to need to enable the packers to make a profit or at least minimize the losses by continuing to pay these high prices for cattle?”
 
Cattle prices have been rising for several months in the wake of the herd culls that followed the U.S. droughts of 2011 and 2012, when cattle food either dried up (pasture grass) or soared in price (feed corn).
 
The shortage of cattle for slaughter has been compounded as ranchers have been holding back heifers to breed and boost their head counts in response to falling prices for corn.
 
Cattle futures reached $1.37 (U.S.) a pound in Chicago on Tuesday, marking a six-month rise of 6 per cent.
 
The Arctic air that has settled over parts of Canada and the United States has caused backlogs at railways, airports and highways, and threatened citrus crops in Florida and winter wheat in the U.S. It has also worked against the operators of feedlots where cattle are fattened up before slaughter. The animals lose weight as they expend energy staying warm, and feedlots must carefully monitor their food intake and health.
 
“In this kind of weather, cattle don’t do all that well in the feedlot,” said Dan Vaught, an agriculture analyst at Doane in St. Louis.
 
The cold weather has been a “two-edged sword” for the cattle market, said Jim Robb, director of the Livestock Marketing Information Center in Denver, Colo.
 
It has driven up prices for slaughterhouses but depressed short-term demand from consumers.
 
“They’re not shopping as much. They’re not getting to restaurants as much, so there’s a bit of a plus and minus in terms of cattle prices.”
 
Mr. Norcini, the trader, figures consumers will be able to absorb higher prices for beef, after enjoying low food inflation for a couple of years. In Canada, food prices rose by just over 1 per cent in 2013, in line with the overall inflation rate of 1.1 per cent.
 
Shoppers have been able to avoid higher beef prices by choosing pork or chicken, but U.S. consumers could soon find themselves paying more for pork as well.
 
A U.S. outbreak of porcine epidemic diarrhea, a virus that is deadly to young pigs, is expected to reduce the size of the U.S. herd and drive up prices there.
 
“My gut’s telling me consumers are just going to get used to it,” Mr. Norcini said.
 
Source:The Globe and Mail

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

Te puede interesar

Notas
Relacionadas