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Rain & High Prices Can Overcome A Lot Of Bad News

Article-Rain & High Prices Can Overcome A Lot Of Bad News

weather perceptions beef industry rain high prices
<p>weather, perceptions, beef, industry, rain, high prices</p>

I think most of us pride ourselves on being fairly open-minded. However, if we’re honest with ourselves, most of us would agree that it’s also very difficult to separate our perceptions from our experiences.

For instance, my little part of the world has been in an extended drought cycle. And the drought situation is so significant that it factors in as a major consideration in almost every decision we have made. However, we have been above normal in precipitation for the past six weeks and the grass is a color I almost didn’t recognize – green.

Intellectually, I know that six weeks does not a trend make, and I realize that others are still incredibly dry. In my mind, however, the drought is well on its way to being gone.

Similarly, I continue to read and hear all the terrible reports about how our so-called economic “recovery” is teetering on the edge of becoming a recession. All this, while I see $2/cwt. calves, hear people talk about $3.50/bu. corn, and see all the green grass. I will admit that it’s hard for me to appreciate the condition of the overall economy when my current personal experience is different.

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July is supposed to be the seasonal low for the cattle market, and the futures sold off as expected, but the fed market rallied in the face of it this week. Cattle feeders are still enjoying margins of around $300/head. You can tell me all the bad news, but right now I’m able to find the silver lining in it.

I read a report this week that indicated consumers are becoming more sensitive about protein prices at retail, and are less willing to pay the prices for protein than they were a week ago. Yet, when I look at the data, I can’t help but notice that hamburger and then steak, while down, were down the least, as chicken wings and pork chops were experiencing double-digit declines. So with my current state of mind, my first thought is that beef is actually gaining in value perception with consumers.   


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