Cattle should fetch higher prices in 2022

Posted at 8:41 PM, Jan 13, 2022
and last updated 2022-01-13 23:07:11-05

CENTRAL TEXAS — Broken supply chains might have made it harder to get what you're looking for at the grocery, prompting some Americans to ask: "Where's the beef?"

"Demand, it's at a pretty historic level," said AgriLife Extension economist Justin Benavidez. "And so that means that people are enjoying the product and eating a lot of it."

Managers at Jubilee Food Market have noticed those same trends. Fortunately, their customers haven't been left empty-handed, as they've taken great care to keep their meat stock up.

"People know what they want, and they're going to get it no matter what they have to do, honestly," said Matthew Wilhite, meat market manager at Jubilee.

Nationwide, supply hasn't quite been able to meet the demand because cattle herds this year are down in size. Livestock economists say that's partially due to natural cycles that occur in the market, but the drought is also to blame.

"Whenever you have drought, it becomes more expensive to maintain cows, and to therefore produce more calves," said Benavidez. "And so we would expect to see fewer cows."

Drought from last year caused many ranchers to sell parts of their herd since proper food and water were hard to come by. Beef was already experiencing price hikes due to a lack of shipping.

Jubilee Food Market was able to avoid major price markups thus far, but they understand that the market doesn't always play fair.

"Some things you can control, some things you can't," said Wilhite. "It's just a matter of timing and getting around it."

With fewer cows entering the market, ranchers are expected to get great prices for their beef this year. Experts say that as markets attempt to compensate for those prices, higher costs may be passed on to the consumer.

"If you've got a higher cost animal at the feedlot level, you're probably going to see a little bit higher sticker price when you go to the retail counter there at your grocery store," said Benavidez.

Benavidez notes that the relationship between higher cattle prices and increased consumer costs isn't a one-size-fits-all problem, but in general, there's a connection between the two.

The increased earnings that ranchers will make this year may be able to cover input costs such as hay, which have become much more expensive during the pandemic. Market analysts say that the extra money may be enough for some ranchers to post a profit, but that's not necessarily true for the entire industry.