Burger Prices to Remain High as Cattle Ranchers Shrink Herds

[Elderberry]

RemarkBoard 5/29/2022

Burgers and steaks are set to stay pricey as U.S. cattle ranchers shrink their herds, further constraining U.S. beef production in the months ahead. Rising costs for feed and other expenses are leading ranchers to sell their calves into feedlots at a faster pace, according to federal data, leaving fewer cattle available for slaughter later this year and in 2023. Persistent drought conditions in the Western U.S. have parched grazing pastures, requiring cattlemen to spend more on supplemental feed, ranchers and beef industry officials said. Beef production in 2023 is expected to decline 7% and cattle prices are expected to increase to record highs, the U.S. Department of Agriculture said this month. Those higher prices will cut into profits for meatpackers like Tyson Foods Inc., TSN 1.43% JBS USA Holdings Inc., Cargill Inc. and National Beef Packing Co., industry executives said, and likely add to consumers’ already rising shopping bills. Jeanie Alderson, a fourth-generation rancher in Birney, Mont., said she sold about 75 aging mother cows from her herd of about 250 in recent months. In a normal season, she would buy new ones in the spring, but it has been too expensive to take on any more this year, she said. Wildfires in the southeast portion of the state are burning up pastures where cattle typically feed, and some of her Montana neighbors have had to spend more on pricey livestock feed, squeezing their budgets and prompting them to reduce the size of their herds.

Burgers and steaks are set to stay pricey as U.S. cattle ranchers shrink their herds, further constraining U.S. beef production in the months ahead.

Rising costs for feed and other expenses are leading ranchers to sell their calves into feedlots at a faster pace, according to federal data, leaving fewer cattle available for slaughter later this year and in 2023. Persistent drought conditions in the Western U.S. have parched grazing pastures, requiring cattlemen to spend more on supplemental feed, ranchers and beef industry officials said.

Beef production in 2023 is expected to decline 7% and cattle prices are expected to increase to record highs, the U.S. Department of Agriculture said this month. Those higher prices will cut into profits for meatpackers like Tyson Foods Inc., TSN 1.43% JBS USA Holdings Inc., Cargill Inc. and National Beef Packing Co., industry executives said, and likely add to consumers’ already rising shopping bills.

Jeanie Alderson, a fourth-generation rancher in Birney, Mont., said she sold about 75 aging mother cows from her herd of about 250 in recent months. In a normal season, she would buy new ones in the spring, but it has been too expensive to take on any more this year, she said. Wildfires in the southeast portion of the state are burning up pastures where cattle typically feed, and some of her Montana neighbors have had to spend more on pricey livestock feed, squeezing their budgets and prompting them to reduce the size of their herds.

“It’s really stressful,” Ms. Alderson said. “A lot of ranchers are in deep, deep debt, and if they have to go more in debt, some people will go out of business in the next few years.”

Drought conditions and higher operating costs for ranchers encouraged the rapid culling of beef cows in the first quarter of 2022, according to the USDA. Cattle producers have lost money five of the past eight months, according to estimates from Iowa State University.

More: https://remarkboard.com/m/burger-prices-to-remain-high-as-cattle-ranchers-shrink-herds/1gp7yt0d6rrmo

[IsailedawayfromFR]

Am trying, but do not think I can maintain the herd size I now have.

Feed prices are 30% higher and fertilizer prices for my hay are doubled.

I cannot pass along those costs at the auction barn.

[Smokin Joe]

Am trying, but do not think I can maintain the herd size I now have.

Feed prices are 30% higher and fertilizer prices for my hay are doubled.

I cannot pass along those costs at the auction barn.

A lot of that goes right back to higher fuel prices and Biden's war on oil. With that AOC bunch, it only means fewer cow farts. (Dear God, this country is in trouble...)

[jmyrlefuller]

If more cattle are being pushed into the markets, wouldn't that at least temporarily put downward pressure on prices?

[roamer_1]

Sorta... But it is time to sell for general purposes anyway... And the snow is off and the range is opening up. Feed and hay cost nothing once the herd goes out to pasture. Beef selling off from western herds will drive the market for the next 90 days. If there is a big sell-off, that should mean cheaper if everyone is downsizing.

When they come back in in the fall is what is impacted by the cost of hay and feed. If there is a hard sell  in the fall... But I don't think that will happen. the west is looking at a great first cut. If the summer stays cool, hay will be cheap(er) due to volume, which may somewhat offset production costs.

[Idiot]

Am trying, but do not think I can maintain the herd size I now have.

Feed prices are 30% higher and fertilizer prices for my hay are doubled.

I cannot pass along those costs at the auction barn.

We are in a severe drought in West Central Texas and many ranchers are thinning their herds.  They can't afford to feed the cattle.

[IsailedawayfromFR]

If more cattle are being pushed into the markets, wouldn't that at least temporarily put downward pressure on prices?

The auction barns, where I will be sending a number of calves tomorrow after working cattle, have not seen that effect.  Prices have remained relatively steady.

Meat processors are taking the lion's share of the profits and are exporting big-time to Asian destinations who pay top dollar for good US beef.

[IsailedawayfromFR]

We are in a severe drought in West Central Texas and many ranchers are thinning their herds.  They can't afford to feed the cattle.

I grew up near the hill country and know there is perpetual drought conditions present on any given year.

Not enough rain and the aquifer is rapidly depleting with the encroachment of too many people who settle down there.

One reason why I retired to East Texas where there is a lot more rain, lots of reservoirs and a whole bunch less people.

The land is not as amenable to growing grass as the prairie is, but at least it is supplied with life-giving water.

[sneakypete]

If more cattle are being pushed into the markets, wouldn't that at least temporarily put downward pressure on prices?

@jmyrlefuller

I suspect a lot of them are just being bulldozed into holes and covered up after killing them. After all,the market just can't take on that much beef at one time,and it would be even tougher these days with so many haulers going out of business due to the insanely high operating expenses. Check your local diesel fuel prices,and then consider operating expenses of filling a 200 gallon fuel tank on a truck that gets 6 MPG.

This will get even worse soon as the market becomes so flooded with beef that the price drops,making it even harder to turn a profit.

Not that it matters to the globalist Dims,of course. They are all wealthy,so inflation isn't really a problem for them. Especially when you consider their plan it to flat out OWN the US.

[sneakypete]

Sorta... But it is time to sell for general purposes anyway... And the snow is off and the range is opening up. Feed and hay cost nothing once the herd goes out to pasture. Beef selling off from western herds will drive the market for the next 90 days. If there is a big sell-off, that should mean cheaper if everyone is downsizing.

When they come back in in the fall is what is impacted by the cost of hay and feed. If there is a hard sell  in the fall... But I don't think that will happen. the west is looking at a great first cut. If the summer stays cool, hay will be cheap(er) due to volume, which may somewhat offset production costs.

@roamer_1

All true,but you are still facing MUCH higher delivery costs and a flooded market operating in an era when a dollar buys much less. I see no way there isn't beef rotting on the ground before it all ends.

Then again,not to worry. There are international bankers out there with plenty of money who will be willing to buy up all the bankrupt cattle farms and dairy's.

At a good (for them,anyway)  price.

[sneakypete]

The auction barns, where I will be sending a number of calves tomorrow after working cattle, have not seen that effect.  Prices have remained relatively steady.

Meat processors are taking the lion's share of the profits and are exporting big-time to Asian destinations who pay top dollar for good US beef.

@IsailedawayfromFR

Ahhh,something I hadn't even considered. There may be some hope yet of saving the family-owned ranches.

Thank you!

[Gefn]

Went out to lunch with mom.

Hamburgers, cheeseburgers, everything on the menu except soft drinks went up an average of $4 a plate since Easter.

They still had peeps waiting 45 min when we left for tables.

[roamer_1]

@roamer_1

All true,but you are still facing MUCH higher delivery costs and a flooded market operating in an era when a dollar buys much less. I see no way there isn't beef rotting on the ground before it all ends.

Then again,not to worry. There are international bankers out there with plenty of money who will be willing to buy up all the bankrupt cattle farms and dairy's.

At a good (for them,anyway)  price.

@sneakypete

Again, sorta. I watch quite a few farmers on youtube, and from what I can see, the South is also in for a bountiful first cut, if it stops raining for any length of time - Granted, that's becoming a narrow window, as the seed is coming to the head down there... If they don't get it down pretty soon, it will be pretty reedy.

And while it is true that costs are higher, as a rule that is fairly local to the local (regional) economy - Not for the drought-stricken southwest who will likely pay dearly for hay shipped in from the northwest or the south... But by and large, with volume driving the prices down, I think it will remain doable. As I said, at least in the west, where BLM land and open range are the norm, it is about to get cheap to keep them. If cow/calf pairs are selling hard right now (because the ranchers figure the land can't handle em), then I am wrong... But I don't see that much up in here.

Grain is a different thing - impacting feedlots more than ranchers. And that is where the hinge moves national, and impacts the cost to the final users of meat on styrofoam trays. The lion's share of the cost is in the finishing, butchering, packaging and distribution - That is where the price will skyrocket.

[IsailedawayfromFR]

Am trying, but do not think I can maintain the herd size I now have.

Feed prices are 30% higher and fertilizer prices for my hay are doubled.

I cannot pass along those costs at the auction barn.

I just got the fertilizer bill.  It went from under $1,000 to $2,500 just since last year.

And the calves I sent to the auction fetched about the same price per pound as last year.

This will translate into wildly inflated costs come the fall, so get prepared.