retail news in context, analysis with attitude

The Wall Street Journal this morning reports that the summer's high beef prices "are just a taste of what is to come," as the drought "has parched pastures and curbed corn, hay and soybean production, driving up the price of feed. Last year, ranchers sold more animals than normal to slaughterhouses rather than pay the high cost to feed them."

The story goes on: "With supplies trimmed, consumers and wholesalers across the country are facing higher prices. About 12.5 million cattle have entered the supply chain for slaughter this year through July, or 2.3% fewer than for the same period last year. Traders and forecasters are predicting more of the same next year as the nation's total cattle herd has shrunk to its lowest level in 60 years."

Making things tougher, in the long run, is the fact that "the effects of drought on beef supply take far longer to reverse than they do with other meats." The Journal notes that "chicken producers, for example, can shrink or expand their flocks in a matter of weeks. For hog farmers, such changes take months. The impact from drought on the cattle herd, by contrast, is measured in years. Female cattle produce only a single calf per year."
KC's View: