Beef and Cattle are Texas’s Largest Economic Exports
However, the last year of economic turmoil has shaken the industry in more ways than one. Fortunately, beef and cattle prices are experiencing an upward trend as the U.S. economy emerges from the COVID-19 pandemic. Traditionally, beef demand increases leading up to the summer season, but national interest is higher than ever as consumers move forward from a year of restrictions and lockdowns. In nearly every industry, the economy is recovering and growing as more businesses open their doors once again. Based on recent USDA reports, beef and cattle ranchers, producers, and distributors can expect an encouraging return to normalcy this summer.
On June 1, Brazil’s JBS SA, the world’s largest meatpacker, was hit by a ransomware attack that halted production in North American and Australian plants. The interruption was resolved quickly, and most of the company’s plants were operational again 2 days later. Despite the JBS cyberattack, the following week’s sales finished well above 2020 levels, indicating a steady return to pre-pandemic levels of production and distribution. In fact, the USDA Economic Research Service reports that “the 2021 beef production forecast was raised 5 million pounds from last month to 27.905 billion pounds” (LDP).
As far as 2021’s second and third quarters go, the USDA reports a raised forecast for fed steer prices based on current price data and wholesale beef prices. As of June, the forecast for the feeder steer price is unchanged. There are several factors that influence the price of fed and feeder steers: weather, global demand, substitution, and energy prices. The weather has a huge impact on the potential supply of grain, which drives up feed prices. As feed prices increase, cattle prices increase as well. In fact, the resources required to raise cattle exceeds that of any other food source; the input costs of feed, land, water, and fertilizer are estimated to be ten times greater than the requirement for other food sources (Commodity). Global demand for beef is largely influenced by GDP growth and unemployment, as beef consumption is often tied to wealthier economies. When consumers choose more affordable protein sources such as chicken or pork, the demand for beef decreases.
Currently, those factors are all working together to increase the supply and demand of fed and feeder steer. As of July 13, daily cattle slaughter increased by 1.6% from last week’s status, indicating a healthy, steady growth. According to David Anderson, Ph.D., AgriLife Extension economist at Bryan-College Station, the retail demand for beef in 2020 was the highest it’s been for the last two decades. Despite an expansion in competing protein sources, the cattle market is on its way back to lucrative growth and productivity.
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#cattle-ranches#Posted by Richmond Frasier • Partner on