January 31

U.S. cattle herd shrinking, pushing up price of beef

Extreme drought leads to scarce food for the animals, so farmers are selling them.

Elizabeth Campbell And Alan Bjerga
Bloomberg News

(Continued from page 1)

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A calf is presented at an auction this month at the 101 Livestock Market in Aromas, Calif. California’s worsening drought is forcing many ranchers to sell their livestock because their pastures are too dry to feed them and it’s getting too expensive to buy hay and other supplemental feed.

The Associated Press

Expanding the U.S. herd is a slow process. Calves have nine-month gestation periods and take 20 months to 22 months to reach slaughter weight, according to Ron Plain of the University of Missouri in Columbia. Animals typically are fattened on corn until they weigh about 1,200 pounds, when they are sold to meatpackers. The calf crop probably declined to 33.57 million head, down 2.1 percent from a year earlier, the Bloomberg survey showed.

U.S. commercial beef output will drop 5.4 percent this year to 24.32 billion pounds, the lowest since 1994, the government forecast Jan. 10. That would mark the fourth straight year of declining production.

Americans may pay as much as 4 percent more for beef this year, after prices rose 2 percent in 2013, according to the USDA. That compares with as much as a 3.5 percent gain projected for overall food costs. The price of all-fresh retail beef climbed to a record $5.036 a pound in December, USDA data show. While global food costs tracked by the United Nations declined 3.4 percent in 2013, meat prices increased 0.5 percent.

While corn, the main ingredient in livestock feed, dropped 49 percent since reaching a record $8.49 a bushel in August 2012, prices are still 25 percent higher than the average of the past two decades.

Texas Roadhouse Inc., the Louisville, Ky.-based steakhouse chain, raised prices in the last two years, trying “to fight off” beef inflation, Scott Colosi, the company’s president, said Jan. 13 during an investor presentation.

For beef, “the supply side remains tight,” said Jim Robb, the director of the Livestock Marketing Information Center in Denver, which is funded by the industry, universities and government. “On a year-over-year basis, we’ll set record wholesale-beef prices, record retail-beef prices and record-high cattle prices.”

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