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We have no prediction for consumer wallets

Progressive Cattle Editor David Cooper Published on 24 May 2022

The list of events that I’ve predicted accurately in my life wouldn’t make me a Las Vegas sage. But in my humble opinion, I’ve got a solid track record.

Over the past 20 years, I’ve selected at least one finalist in the NCAA basketball final 12 times, and both finalists three times. I predicted the Brangelina divorce, the Tom Brady unretirement and was spot on for every presidential election since ’96. As for one of our favorite columnists in this publication, I can predict his deadline performance with about 95% accuracy.

Also, one year ago in this column, I warned it would be a summer of inflation. What I didn’t predict was that it would be the fall inflation, would turn into winter inflation and drag on into spring and summer … again.

So here’s another prediction, one that I qualify isn’t one of my own, rather an outlook that includes the keen eye of market analysts such as Derrell Peel, Corbitt Wall and Troy Applehans.

Come next fall, the industry should see huge increases in cattle prices – and some that will compete with the record run of 2014.

U.S. processors are slaughtering cattle at a record pace right now – almost 18% higher than one year ago. This comes after a slight decline in overall cow herd numbers seen in the Jan. 1 inventory report (down 2.3% from 2021) and a calf crop that was also down 1.1% last year.

And the summer may be even heavier on the slaughter side. Well over 70% of the country is in drought category, and even with some recent rains in parts of the dry country, we are looking at a very dry summer. If the New Mexico fires are any barometer, much of the cattle in the Southern Plains and West are standing on ground that qualifies as tinder.

We are importing more beef – lots of it. And yes, it includes a huge supply of beef from Brazil. I’m not going to kick that hornet’s nest. But let’s just say that scares a lot of people.

Even more warning signs are looming. Boxed-beef cutout prices saw a decline in late April/early May. What does that portend? Consumers are feeling the punch of inflation in practically every sector of the economy. Gas prices are staggering right now. There’s low unemployment, but that is also a sign of the labor shortage forcing services to be more costly. Add up all those factors, and the question is: Can Americans afford the pricier muscle cuts this summer? Will ribeyes and tri-tips become more akin to lobster?

The very real potential for record cattle prices next fall, when the herd is smaller, shackle space is wider and bidding is stronger, must be balanced with the realities of today. Ranchers can survive the struggles of drought, blizzards, costly feed, BSE and pandemics. But it’s the consumer ability to buy quality product that defines success. And right now, that’s something we just can’t predict.  end mark

David Cooper
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