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SHRINKING U.S. CATTLE HERD SIGNALS The Midwest Cattleman · August 25, 2022 · P12
MORE PAIN FROM HIGH BEEF PRICES
By Tom Polansek
U.S. consumers grappling livestock producers, though
with soaring inflation face U.S. government data shows
more pain from high beef ranchers on July 1 had al-
prices as ranchers are reduc- ready reduced the nation's
ing their cattle herds due to cattle herd by about 2% from a
drought and lofty feed costs, a year earlier to its lowest level
decision that will tighten live- for that date in about seven
stock supplies for years, econ- years.
omists said. Producers will likely liq-
The decline in cattle num- uidate even more cattle due
bers, combined with stiff costs to drought, said Shane Mill-
for other production expens- er, Tyson Foods' president of
es, illustrate why a recent fall fresh meats, on a conference
in grain prices to levels not call following the quarterly re-
seen since Russia's invasion of sults. Chief Executive Donnie
major corn and wheat export- King projected prices for cattle
er Ukraine may not immedi- and beef will rise moving into U.S. consumers grappling with soaring inflation face more pain from high beef prices
as ranchers reduce their cattle herds due to drought and lofty feed costs, a decision that
ately translate into lower food 2023 and 2024. will tighten livestock supplies for years.
prices at the grocery store. Ground beef prices have al-
Feed is the largest cost ready jumped 10% from last kow, a farmer who raises cattle Other protein options have
component of raising a cow year, U.S. government data and sheep in Wamego, Kansas. also become pricier. Tyson
for beef, so lower grain prices shows. Rising cattle costs eat Brunkow, a member of the said its chicken prices soared
often help to reduce meat pric- into meatpackers' profit from Kansas Farm Bureau's board 20.1% in the last quarter
es. But meat companies like high beef prices. of directors, said high diesel from a year earlier. Wholesale
Tyson Foods Inc, which recent- Tyson reported its beef fuel and feed prices contin- prices for white eggs, mean-
ly reported weaker-than-ex- unit's adjusted operating mar- ue to drive up his production while, reached a record high of
pected earnings, must pay top gins dropped to 10.2% in the costs. He recently paid about $3.40 a dozen on July 21 due
dollar for animals when there April to June quarter from $475 per ton for sheep feed to strong retail demand and
are fewer to slaughter. Proces- 12.7% the previous quarter made with corn and other in- avian flu outbreaks that killed
sors are also paying more for and 22.6% a year earlier, while gredients, up 40% from a year egg-laying chickens, data firm
labor, fuel, and other items. live cattle costs increased ago. Urner Barry said.
"There's really a lot of dis- about $480 million. Margins Some consumers are In Eugene, Oregon, ac-
tance between the price of will decline further to 5% to switching to chicken or cheap- counting student and moth-
those grains and the price of 7%, the company said. er types of beef to reduce their er, Blair Hickok, 40, said her
those products at the meat Margins and meat sup- food costs, meatpacking exec- monthly grocery bill spiked
counter," said Bernt Nelson, plies get a temporary boost as utives said. Still, Tyson said 40% to more than $1,200 due
economist at the American ranchers send more animals to beef demand remains strong to climbing prices for beef,
Farm Bureau Federation. slaughter, instead of keeping and reported sales volumes chicken, eggs, and products
Corn futures prices have them to reproduce, analysts rose 1.3% in the last quarter like Johnsonville bratwursts.
dropped 26% since hitting a said. But consumers will ulti- as prices slipped. Her family stopped eating out
10-year high in April after the mately be left with less beef, "Even though we may be to save money.
Ukraine war sparked worries and it takes nearly two years seeing some relief in feed pric- "We cannot sustain this for
about global supplies. Prices to raise a cow once the liquida- es, that demand is going to hold very long," said Hickok.
are still up 9% from a year ago tion stops, economists said. (beef) prices where they're at," Reuters
at about $6 per bushel. "The prices are here to stay Iowa State University econo-
The lower prices benefit for a while," said Glenn Brun- mist Lee Schulz said.

IS THE CATTLE In 2021, North Dakota, explains. Cattle Prices
continued from page 3 South Dakota, Montana and Currently, production for Although what looks to be

topic of conversation for sev- Nebraska faced drought, the third quarter remains the perfect storm to see near
eral months in many parts while 2022 has brought the relatively steady with 2021; 2014-levels of cattle prices,
of the U.S., as producers are addition of Texas, Oklahoma therefore, Brown doesn’t ex- Brown is reluctant to say the
running short of pasture and Kansas to the list of dry pect to see much change for industry is headed towards
and hay supplies to make it areas and continued herd liq- the remainder of 2022. record prices.
through the year. uidation. Cow Liquidation “I think that it is the econ-
Currently, much of the se- Beef Prices Not only do drought and omy that could derail all this
vere drought areas sit atop Cattle on Feed limited feed resources cause positive… I don't like record
the largest beef cow states, “There’s been a lot of dis- cow liquidation, Brown notes prices because of a downturn
including Texas, Oklahoma, cussion that [we] already ex- a lack of profitability plays a in supplies. I want record
Missouri, Kansas and Ne- pect some cuts, yet the feedy- role in this as well. prices because of strong de-
braska. ards are full. I actually think “Folks that have chosen to mand,” Brown explains. “I
“I think we're starting to we have to get into 2023 and get out of the business tend don't like how we are nec-
find this being close to where maybe late spring or sum- to be smaller, older produc- essarily getting here, but it
we were in 2012. I wouldn't mer before we start to real- ers. There's no one coming sure looks like we're set up
have said that a few weeks ly see what, I think, will be behind them to keep the cow for some extremely high pric-
ago, but right now, I'm wor- much shorter numbers that herd. Those changes don't es.”
ried about where we're should give us some poten- turn around right away,” Drovers
going,” Brown says. tially higher prices,” Brown Brown adds.