BRANDON – Meat prices will keep up with corn price increases, but cow-calf and weanling pig operators are going to pay the price.
That was the conclusion from James Robb of the Livestock Marketing Information Centre, in a presentation to farmers at Manitoba Ag Days.
“Feeder animal prices are under pressure and will be under pressure from these higher feed grain prices,” said Robb, whose service is based in Colorado.
“The fed cattle market will be strong, the slaughter hog market will be strong, the slaughter lamb market will be strong, but you’re going to have to spread out the feeder animal prices to reflect that higher cost of gain that will happen in animals.”
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Corn prices are the biggest single cost factor in feeding most livestock in North America. Even feed mixes that don’t contain corn are affected because other grains and meals increase in value in step with corn.
Cattle and lamb producers will suffer the least from corn’s rally because much of their weight gain comes from grass and other non-grain sources. But hogs and poultry depend much more on corn and those producers will pay more for feed this year.
Cattle feeders can also take greater advantage of feed alternatives such as distillers grains and oilseed meal.
Because meat demand is still strong, and the North American cow herd is not growing significantly, meat prices should hold, Robb said. But retailers and livestock feeders will push down calf prices to lock in their margins.
Robb said meat prices will stay strong partly due to the lingering effects of the drought of 2006 in much of the U.S. Midwest and west. Following the historical pattern, the cow herd should be growing, but the drought caused many cows to be shipped to slaughter rather than retained and bred. That means that this year fewer animals will be born, which is good news for two years from now, and fewer cows remain to be slaughtered, which is good for cow prices now.
But a worrying red meat trend is reappearing, Robb said. The Atkins diet fad encouraged red meat consumption but per capita red meat consumption is falling again.
Robb said producers are fortunate now to be in what appears to be a flat cattle cycle because of the 2006 drought, but they need to keep funding market development activities and research because the long-term meat consumption trend is bad news.
“We’ve had the easy years (of the Atkins effect), but now we’re back to the hard work of consumer demand maintenance and hopefully growth,” said Robb.
