From the Wall Street Journal:
Fewer Heads Fattened for Slaughter; Higher Beef Costs Seen
U.S. cattle prices soared this week as the number of steers and heifers being fattened for slaughter fell, a sign of shrinking supplies and higher beef prices ahead.From an April 2008 post:
Live cattle for June delivery rose 0.9% to $1.1225 a pound Thursday on the Chicago Mercantile Exchange, bucking a selloff in most other commodities.
Cattle prices have climbed more than 4% over the past week, driven by strong wholesale prices—those paid by grocery-store chains and restaurants—and data foreshadowing a decline in the number of cattle available to packers, who butcher and ship cuts to stores.
Recent data from the U.S. Department of Agriculture show that the number of young cattle, known as feeders, being sent from grazing lands to feedlots fell on a year-over-year basis last month. That was the first decline in so-called placements since February and only the third in the last 12 months. The total number of cattle in U.S. feedlots fell to 10.928 million as of June 1.
It takes about five months to fatten feeder cattle for slaughter, so fewer such cattle now means less meat available for sale this fall.
Futures hit all-time highs early in the year, spurring ranchers to sell more of their cattle. A severe drought in Texas also encouraged such sales because there wasn't as much grass for the cattle to eat.
More sales meant more supplies, at least in the short term, and futures prices declined during most of April and May as a result.
After the surge in cattle sales, producers now have fewer animals to sell to the feedlots. The limited supply eventually will trickle through to the market for slaughter-ready cattle and could lead to higher prices for beef later this year and in 2012, especially if export demand for U.S. beef remains strong....MORE
The Hog Cycle
No not Harley-Davidson, although I imagine some econ grad student has written the paper.
Wheat and hogs are two commodities with long price series. We mentioned the hog cycle back in January:
The hog price series is one of the longest we have records for, back to the 1200's. The cycle is:
slaughter begets scarcity begets higher prices begets breeding begets over-supply begets slaughter. It's been going on for a while....