Shagam: Tighter Supplies Expected To Lead To Higher Prices

Last week's USDA cattle on feed report had even more evidence that supplies of fed cattle are shrinking and could eventually lead to a decline in beef production.  This, the USDA notes, has already appeared in higher prices up and down the chain.  USDA livestock analyst Shayle Shagam said when it comes to feeder cattle, USDA tracked 750-to-800-pound steers at Oklahoma City, and as of last week those prices were running about $171 cwt.

“And that compares to $154 cwt a year ago.   So again, signs of those tighter supplies are manifesting themselves in the fact that feed lots are having to bid higher for those feeder cattle.”

But producers are getting higher prices for their fed cattle averaging $174 versus only 124 a year ago so feedlots are still managing to absorb those rising prices for feeder cattle.

“But increasingly those feeder calves are going to become more expensive as supplies type further.”

Which Shagam said could lead to more expensive beef at the grocery store into the future.

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