Continued contraction sets the stage for higher prices

An ag economist says continued contraction in the cattle industry sets the stage for higher cattle prices. 

University of Missouri’s Scott Brown says that’s good news for producers.  “We look at the percentage of heifers relative to the total on feed, it continues to be at high levels,” he says.  “It came in at 38.8 again this quarter, which tells me we’re not holding back heifers either and we’re slaughtering more Cows.  All that’s very positive to prices.”

But, he tells Brownfield that could also mean higher prices for consumers. “We almost certainly know we’re going to have fewer cattle to slaughter the next few years and that likely leads to fewer supplies for domestic consumers,” he says.  “And ultimately, probably higher prices.”

Brown says in some instances that could lead to consumers switching proteins, but that may not be the case in this situation.  “Prices are higher across the border right now,” he says.  “So, it’s not like there’s a good alternative that isn’t also relatively expensive.”

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