What is the future of beef prices?

“Irrational Exuberance” is a famous quote from a speech given by Allen Greenspan in 1996; a question he raised included this remark and caused stock markets around the world to drop in value, at least temporarily. 

If something is irrational, there are no facts supporting it and it should not happen; but it does making it irrational or unexplainable and it happens with enthusiasm or exuberance. Simply put momentum for no reason.    

There are fundamentals and facts driving the beef industry today and indeed some momentum is building. We have a short supply of cows, the “factory” we use to produce the feeder cattle destined for growing and finishing for the high quality beef we enjoy.

The cows themselves are a large contributor to the overall supply, mostly hamburger and low-end steaks. When there are fewer cows, we simply end up with less beef be it hamburger or steaks needed to supply our domestic and growing world market.

Be sure to understand we are harvesting more pounds of beef per finished beef animal today than ever before, so it takes fewer to produce the same amount of beef but this does not make up for the population shortage.  

Exports are another fundamental driving the beef industry. We sell other countries all types of beef products. Some think steak is the only exported beef product – not true but it is in great demand. Would you believe beef tongue has significant appeal to some and they will pay good money for it?

My grandfather fixed it cold with mustard, served on a sandwich – good eating. The point is beef is selling around the world and United States beef is at the top of the shopping list of those who can afford it. 

These two points help explain historically high beef prices, both on the hoof and in the supermarket. The question remains what is the future for beef prices. Randy Blach of Cattle Fax suggests there is a correction in our beef price future. Caution is an important word when predicting the future, but history often gives us a guide in this pursuit.

When will there be a correction in beef prices? Who knows, but we do know some causes of price drops in the past. Some of these are predictable and some will catch you by surprise.

Remember how Mr. Greenspan causing a market reaction and how the “cow that stole Christmas” in 2003 caused the U.S. beef market to freeze up.  

Timing the market is nearly impossible, so stick to your usual marketing plan, raise calves as you always have, putting on gains and selling them at your “market ready” weight when you usually do. As the work by Kevin Dhuyvetter at Kansas State suggested, what you do with your income has more to do with your profitability than the amount of income you make.

Carl Stafford is the extension agent for Culpeper County. He can be reached at ccstaffo@vt.edu.