Beef Producers Likely To Reap Bounty Next Year With Higher Prices

If America's beef producers can weather the worst drought in decades that dealt a harsh blow to the nation's corn crops, they can expect to reap a bounty beginning late next year, when beef output is estimated to be at a nine-year-low, according to the U.S. Department of Agriculture.

This bounty, however, also means consumers will be paying more for their steaks and hamburgers.

The country entered the year with beef cows numbers at 29.9 million, a 49-year-low. By July there were only 600,000 more heads. Corn prices have rocketed, and feedlots are operating at a loss as they try to fatten up the feeder cattle they have on the lots, according to Bloomberg.

But if they can weather the storm, beef producers are going to profit as supply dwindles.

"The message for cow-calf producers is to hold onto the cows, if possible," Chris Hurt, Purdue Extension agricultural economist told Southwest Farm Press. "The short-term losses of the next 12 to 14 months will be replaced by large profits in late-2013, 2014 and 2015."

Beef producers must plan strategically to make it through the next year, by carefully selecting and culling their herds, using feed alternatives and savvy marketing.

"All indicators point to a prosperous future for beef cow-calf producers if they can just find solutions to this year's short forage supply and escalating feed cost," Purdue Extension beef specialist Ron Lemenager told Drovers Cattle Network.

Meanwhile, it seems Americans are stocking up. The USDA reported Thursday that the supply of beef in cold storage was 455.7 million pounds, or 10 percent higher than the same period last year. Cattle were sent to slaughter earlier than usual this year, as ranchers saw their grasslands wither and feedlots received feeder cattle sooner than usual.

Cattle prices rose 11 percent in April and are 2.4 percent higher for the year, according to the Chicago Mercantile Exchange. Meanwhile beef production will decline 3.9 percent, according to government estimates. Last month the USDA predicted that beef prices will rise 5 percent next year and will be the leader in the food-inflation category.