By Jake Putnam
Idaho Farm Bureau Federation
WASHINGTON - Beef production in this country continues to grow and consumer demand for that beef also is on the rise.
Demand means higher prices for beef cattle producers, but also for shoppers at the nation’s supermarkets.
The US Department of Agriculture says cattle prices average at least 1-percent higher than last year and for the year 2020, could go up more than 2-percent.
July market prices, just released Friday, show a steady rise according to the USDA showing a classic supply and demand model for the beef market.
“The retail choice-composite beef price for July was estimated at $6.15 cents per pound. That price per pound is up from $6.00 per pound from a year ago. So retail beef prices are on the rise,” according to USDA Economist Seanicaa Herron.
According to the USDA, prices are up 2.5 percent from a year ago. But for this year, all cuts of beef, reveal a hike between 1/2 percent and 1.5 percent. Forecasters say for the coming year, beef prices could be up another 1-percent.
Idaho Farm Bureau Commodities Director Zak Miller says he’s kept an eye on the market and thinks prices had nowhere to go, but up.
“I think cattle prices are showing a short-term increase in the form of a correction from the Tyson fire a couple of weeks ago. It’s always encouraging to see upward ticks in the price movements but unfortunately, I expect to still see bearish and downward market moves,” said Miller.
Miller thinks producers and investors should look closely at long-term planning with the current markets, cautioning that beef-market volatility could still swing either way.
As Miller pointed out, the Tyson slaughterhouse fire on August 9th has impacted the beef market, driving up profit margins for processors while paradoxically slowing price hikes for cattle.
In Emmett at 7-Rivers Livestock, the modest spike in beef prices has not gone unnoticed. For the first time this summer, cattlemen are making a little money. Auctioneer Eric Drees says producers are encouraged.
“The market has found its footing. We hope we won’t see major slip backs. The fundamentals are there for the market to stay steady and get stronger. We're seeing packer manipulation right now, they’ve got total control of the market. The good news is that demand for beef is good and exports are good,” said Drees.
Drees says there are other bright spots on the horizon, President Donald Trump’s trade agreement with the European will drive up the value of beef. He says the economy remains steady and consumer demand is brisk.
Due in part to the fire that nearly destroyed the Tyson slaughterhouse in Holcomb, Kansas. That plant processed 6,000 cattle a day, or 5% of the total US beef slaughter.
The impact of the loss of the Holcomb facility is expected to drive up demand, not to mention the drop in the number of slaughterhouses nationwide. This week prices for boxed beef are up 10%, according to USDA figures.