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Agricultural News

Record-High Beef Prices Could Mean Enhanced Profitability for Cattlemen

Tue, 12 Mar 2013 12:37:27 CDT

Record-High Beef Prices Could Mean Enhanced Profitability for Cattlemen
CattleFax predicts record-high beef prices and quality premiums in 2013. Although drought still blankets much of the United States, cow herd liquidation has slowed and more heifers are being retained for breeding. That combination means beef production will be down about two-and-a-half percent.

"We're a little concerned about the prices at this point for beef," says Kevin Good of CattleFax. "As we go to higher prices we are suggesting that retail prices will be up about four percent this year. The price spread between beef, poultry and pork has widened out over time. And because of that we are seeing less featuring at retail and we think we're losing a few of our customers just because of that price point."

Although per capita disposable income will be flat to slightly lower this year, there is some good news for cattlemen, Good says.

"We've got consumers that have plenty of income; they might be tied to corporate profits. We still have a stock market that's trading near record levels, so you've got folks out there that have dollars to spend. And because of that we continue to believe that we'll continue to see wider spreads for CAB, top two-thirds choice and prime products over select products. So look for wider spreads in 2013."

Due to scarce supplies, feeder calf values will advance five percent in 2013. Developed heifers and bred cows will also fetch a premium, Good says, especially those that can produce premium beef.

"That represents an opportunity for cattlemen to produce more of that type of product to get paid bigger premiums over commodity beef."



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