Tuesday, January 22, 2013
Cattle Prices Are Near 25 Year Highs
The second chart is a five year chart, and it places the latest rally in perspective. Prices have rallied pretty consistently from 2008 until today, with the exception of a gap down in 2012.
So -- why the increase? There are two reasons. First, as the number of middle class people increases world wide, their tastes and preferences change. This means they want to start eating meat more often. The second reason is the spike in the grains complex, which is the primary food source for cattle. As the cost of grains has increased, the cost of raising and producing cattle has increased. This has led to an increase in the selling costs as ranchers have sought to protect their profits.