Fed cattle prices keep setting record highs, now touching $170/cwt., after starting the year at $135/cwt. That begs the question: What is going on? Will cattle prices just keep setting new records? For how long? Purdue Economist Chris Hurt explains:
“The U.S. cattle cycle is well documented back into the mid-1800s. That is a cycle of rising and falling production over 10 to 12 years with a price cycle that is inverse to the production cycle. Studies of those cycles suggest that prices tend to reach their cyclical peak in the early phase of cow expansion as the industry begins to rebuild the herd.
“There are two reasons for this: first, the number of market-ready animals is already small due to the contraction that has been going on; and second, the retention of heifers and cows further reduces slaughter animal numbers even more, thus pulling down beef supplies.”
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