February 8, 2017
Prices don't seem quite as rosy as they did a couple of years ago. We've come down from some of the highest highs we've ever seen. Now, the reality of harder times stares us in the face. How did we get here? That could be an article in itself, but we'll attempt to lay out a 30,000-foot view for you as it relates to the beef sector.
In 2004 and 2005, producers started to slowly build beef cow numbers. Drought came knocking in 2006, halting expansion. Beef cow numbers declined until 2014 due to financial crisis as well as droughts again in 2011 and 2012.
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After the recession, producers paid off debt and better positioned themselves for the future. As consumers' financial positions improved, demand increased. At the same time, a weak U.S. dollar made our beef relatively cheap to our international customers, further increasing demand. This whirlwind of events worked to drive prices up.
Then, rains finally came and forage was replenished in predominate beef production regions. Producers had the chance to respond with increased production, and they did by increasing cattle numbers at a historically strong rate. With geopolitical unrest in 2015, the U.S. dollar strengthened, leaving more beef here at home at just the time producers had supplied more calves.
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