Rain: A Good Sign

As I was writing this column on Jan.10, it was raining, which is something we don’t expect to see this time of year. It’s sure welcome, and I’ll take it as a sign of better times to come in the agriculture industry through the course of the new year. 

Many people in the beef business believe the industry is looking good. In fact, it is pretty hard to find a negative story on the American beef industry these days, unless we start talking about major meatpackers who claim they aren’t making a profit.

At the end of 2022, we saw the highest prices of fed cattle all year long, with strong prices for cattle across the country. 

These strong prices and lower numbers of fed cattle caused slaughter numbers to drop. It also raised the price of beef at food service companies and grocery stores, which is the big story. 

How high will beef prices go? I certainly hope it doesn’t get so high shoppers turn away from buying beef.

I’ve read no one really knows when boxed beef prices will start to rise in 2023. However, everyone knows it will come – possibly in the first quarter or sometime in the second quarter – for all cuts of beef.  

Some people have started thinking about blending beef with lean pork at a mix of 75 percent to 25 percent, respectively. They claim the beef flavor will dominate and the pork will make for a good, high-quality protein filler. 

They believe this will work well if prices of pork don’t jump. They also realize ingredient blending must be totally transparent on labels and restaurant menus. 

Restaurant managers have started considering using smaller portions of beef and adding something else to the plate for customers, such a fresh vegetables or homemade soups. Other thoughts include blending beef for hamburgers with mushrooms, black beans or bean flour in an effort to stretch beef a little further. 

Restaurant operators are going to have to use some new, innovative practices to stay profitable since they have to make up for COVID-19 losses from the last couple of years.

In articles I’ve read, cattle prices for producers are forecasted to rise, but there will be lingering drought in many parts of the country. For our region, weather forecasts show drought should end come spring or early summer. I certainly hope so.

Overall rising cattle prices at the end of 2022 sends a strong signal for a promising 2023.

CattleFax says, “The tighter fed cattle supply will limit downside price risk in coming weeks through this seasonal weak spot for the fed cattle market. The post-holiday slump is more likely to manifest this year in the form of limited upside rather than substantial downside. The mid-$150s should provide strong support on a U.S. average basis.”

They go on to say, “As spring beef demand approaches, expect the fed market to resume the uptrend. Tighter fed cattle supply and reduced beef production from recent years should outweight demand challenges, moving beef and cattle prices higher. As a result, the spring rally in fed cattle prices has potential for highs up into the mid-$160s.”

With all of this positive news, it is important to do research when deciding what the best time will be to contract calves and yearlings, instead of just flipping the coin.