Better beef market around the corner?

US - Cattlemen in South Dakota could see a better beef market in future months, according to a Wells Fargo representative who spoke to area cattle producers during the Governor's Beef Industry Conference Monday at the Ramkota RiverCentre in Pierre.
calendar icon 14 February 2007
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Dr. Michael Swanson is the company's senior agricultural economist. Swanson works with agricultural producers and processors and focuses on competitive strategy and risk management for a wide variety of crops and livestock.

And according to Swanson, cattle prices are going to get better in South Dakota whether the price of corn continues to rise, or drops slightly.

Swanson said the price of corn is and will continue to have a good effect on cattle prices, which are always moving.

The recent drop in the market, Swanson attributes to a sudden rise in the cost of corn that hit the market unexpectedly, but the same factor that made cattle prices dip, will make them rise again.

In Swanson's opinion, if corn prices stay high - $4 or more per bushel - beef prices will be driven up, but not as fast as its immediate competitors, pork and poultry, inspiring more people to choose beef.

If the price of corn drops back down to around $3 per bushel, feeder cattle prices will rally, Swanson said.

He emphasized that beef is neither more expensive, nor less expensive than anything else people buy, though it is relatively more expensive than its main competitors, but it is also the preferred product.

"Nobody ever says they're going to go out and celebrate by having a chicken breast," Swanson said, invoking laughter from his audience. "They say they're going to go have a steak.

The two most important factors impacting supply and demand for beef, according to Swanson are population growth and personal impact growth. And the population demanding beef through the North American Free Trade Agreement is much higher than beef production.

"We don't have enough cattle in this country," Swanson said, but he also warned that cattle producers have to remain cost-competitive.

Source: Capital Journal
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