Meat producers face rising cattle prices

US - A recent rise in cattle prices has left Wall Street analysts worrying meat producers may be in for a lean summer.
calendar icon 21 March 2007
clock icon 1 minute read
High feed costs and bad winter weather have pushed cattle prices up nearly 14 percent since March of last year, according to the U.S. Department of Agriculture.

"It's the highest we've had this year so far," said the department's livestock analyst Joel Greene. The average price for Nebraska steer is $97.33, up from $85.73 in March of last year.

Economists blame the high prices partly on skyrocketing demand for corn, a common ingredient for feed. Corn prices are up more than 90 percent from the same time last year, according to the latest Bureau of Labor Statistics data, mainly due to demand for gasoline-additive ethanol which is made from corn. Corn is now selling at more than $3 per bushel. Last year, the price averaged about $2 per bushel.

As feed prices rise, farmers are less inclined to place their cattle in feed yards. That, in turn, sends production levels down and prices up, said Andrew Gottschalk, owner of, which conducts research on livestock and grain feed markets.

Gottschalk said cattle placements in feed yards have fallen for six consecutive months. At the same time, the industry has had to deal with bad winter weather in key cattle-feeding areas like Texas, Kansas, Nebraska and Iowa.

Source: Business Week
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