Sizzling market pushing up beef prices

3:57 PM, Feb 3, 2011   |    comments
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  • Sizzling market pushing up beef prices
  • Sizzling market pushing up beef prices
  • Sizzling market pushing up beef prices

ROBERTS, Wisc. -- It is not such a bad place to be these days, in the seat of a John Deere tractor, pouring out feed for 140 steers six months from market.

"These are mostly angus," says Ken Herink. "Yeah, this will be a good year."

Herink is on the right side of a sizzling market for his product.  Cattle prices are up 25 percent from this time last year -- with most experts predicting the run-up has only started.

The supply simply isn't meeting the demand.  

"We're dealing with what we believe will be the lowest calf crop in the U.S. in about 60 years; lowest cow numbers since 1958," said Jeff Reed of Central Livestock Association.  

Low prices during the recession pushed some farmers out of the cattle business and caused others to reduce their herds.

More recently, skyrocketing grain prices have made it more profitable for farmers to simply sell their corn on the market, rather than feeding it to cattle.

Greg Bonngard stands on the other side of the equation.  The owner of Bonngard's Family Meats in Cottage Grove says he can only absorb so many price hikes before passing them on to consumers.

"You take the hit on the first 40 cents and maybe next time you up your price," he says,"  just to keep from sticker shocking people."

Still he doesn't begrudge the cattlemen who put the steaks in his cooler.  "Now they're getting what they should get and that's a shock to everybody."

Last week, McDonald's announced plans to raise prices at its restaurants.  Analysts predict grocery store beef prices will rise between four and five percent this year.

What some call a price hike, Ken Herink calls a correction.   He notes that the 32-year-old tractor he's driving would cost $100,000 new and burns $30 worth of diesel fuel during each day's cattle feeding.

Herink said cattle prices had to go higher "to keep people in this country producing beef, or else all we will have in this country is imported beef."

To Herink and other cattlemen, it's a good time to have a stake in beef.

(Copyright 2011 by KARE. All Rights Reserved.)

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