Why are beef prices so high

[HDRider]

I suspect this might drive our beef prices up

The latest monthly trade data shows that July imports of Mexican cattle were down 37.5 percent year over year. Mexican cattle imports for the first seven months of the year were down 18.7 percent compared to 2020. Preliminary weekly data from USDA-AMS through the end of August shows that year-to-date cattle imports are down 21.0 percent year over year.​

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Mexican cattle imports are on pace for an annual total of 1.15 – 1.20 million head this year. Over the last 30 years, annual imports have averaged 1.1 million head although the average in the last decade has been a bit higher at 1.23 million head. In 2020, Mexican cattle imports totaled 1.44 million head, the highest total since 2012. Total imports last year were up 9.2 percent from 2019.​

Mexican cattle imports decrease in 2021

There are several factors to blame for the uptick in 2020 and the downfall so far in 2021.

www.beefmagazine.com

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Canadian cattle exports for the first half of 2021 are down 23% compared to 2020 and 26% lower than the 5-year average,' says Jason Wood, livestock market analyst with Alberta Agriculture and Forestry. 'Year-to-date, Canadian cattle exports in 2021 are the lowest in about 15 years.​

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Wood says the decline in cattle exports has been influenced by a number of factors. These include expansion of the U.S. cattle herd over a 6-year period starting in 2014. The US beef cow inventory increased by over 2.6 million head, reducing the need for imported live cattle. Since 2014, the Canadian beef cow herd has declined by 297,000 head, reducing the available supply of cattle for export.​

Update on cattle imports and exports

Year-to-date cattle exports are at one of the lowest levels in 15 years, while imports are increasing.

www.alberta.ca

 

[Nesikep]

Maybe so, but there's people that complain because they're getting far less than even the average price, which was the point of my post, quality makes a difference!

It certainly wasn't the point of this post, those aren't the people I'm talking about, and i'm sure most people on this board fall around the average and above for their price.. Most the the pictures I see here are of pretty decent cattle.

I suspect Canada's cost of production is higher than ours.

I'm quite sure it is, just starting with fuel prices and distance-to-market

 

[wbvs58]

Over here with our herd rebuilding and exceptional cattle prices the processors are doing it tough but are keeping going to keep their skilled workers together and employed and to also service their export markets. As soon as things get back to normal supply and prices there is nothing more certain that they will be sinking the boot into us and pay as little as they can for our cattle and will keep it up for as long as they can. They have no compassion or sense of what is fair.

Ken

 

[HDRider]

I'm quite sure it is, just starting with fuel prices and distance-to-market

Let's assume US production costs are less than yours. To flip @shaz comment, what stops US, or even Mexican beef from flooding into your market and displacing Canadian beef?

 

[Nesikep]

Let's assume US production costs are less than yours. To flip @shaz comment, what stops US, or even Mexican beef from flooding into your market and displacing Canadian beef?

Costs fuel to transport it, container shortages, etc. I'm sure there's probably some agreements in place too, but we do have argentinian beef in stores here

 

[Silver]

I would have to look it up but I believe Canada imports a fair bit of US beef currently.

 

[Ky hills]

A business has the right to sell for what it can get and buy for as little as it can.
With the exception of utilities. Do we want agricultural to be considered a utility??.
The Packers have leverage and they use it . Doesn't make them crooks. Every person here has every right to open a meat packing facility. You also have the right to not sell your beef at the price offered. I understand the issue with that but it exists in all business to some extent. The bigger and more established you are the more advantage you have. Upstarts have to fight their way up. You can't be for deregulation and regulation at the same time. If you get the opportunity to be in a position to make good profits will you decline? will it make you dishonest?. I know of no other industry or profession where people think that they are entitled to be be profitable just because that's what they want to do. I know of no other business where the biggest customer is considered the enemy. Think about it.
Hate the consumer, hate the packer, hate the store, hate the McDonalds. Although the people that do make money producing beef don't seem to complain to much...

I agree with a lot of your assessment in principle. There are some caveats though in my opinion when it comes to regulations and deregulation as well as and especially when a domestic food product is involved.
The example of utilities is interesting, as they have little to no competition at all, and they conduct business accordingly. They are able to raise rates and add various fees pretty much any time they desire. I have seen maybe one time that the local government declined a rate increase for a utility company.
It's human nature to want to make more money, and that other businesses may not complain as much because they can for the most part raise their prices for products and services. As we know that it is customary for increased cost of operation to be passed on to the consumer. Cattle producers do not get that option, because our open market is pretty much controlled by a monopoly.
We could have the best solid black perfect frame, perfect condition calves possible and there is still a very close ceiling. Every input cost is rising, and yet we are expected to do more with less all the time. We are trying to market some cattle private treaty, but still the system is so monopolized that that opportunity is not feasible for every animal or producer.
No matter the excuses made, the monopoly has an advantage in that they are big enough to have influence on regulations. They can absorb costs that start ups can't. I get it thats business, but, when it comes to producing our own consumable products, that is a whole nother issue. I don't believe that foreign entities should have ownership and/or control of our food supply. I firmly believe that is a national security issue in itself.
It's obvious that as a nation we can't produce everything we need, but certainly emphasis should be on trying to produce as much here and distribute for consumption at a much more regional and local level.
We hear a lot about buy American made products and that we should be supplying as much of our oil as we can, but funny how food is ok if it's controlled by foreign monopolies or all imported when our local producers are squeezed out.

 

[Lucky]

Does anyone know what price the packers are actually paying for a steer? I have know idea what they pay. Something like 75% of sales are done through private negotiated contracts. The new Cattle book bill should shed some light on things but will probably take years. You definitely can't go by the "packers record profits" line. Heck we are making record profits at the business and the ranch but both are still barely getting by. The only reason we have records profits is because we finally got both paid for. If you want more for your product don't sell it until you get your asking price.

 

[shaz]

Does anyone know what price the packers are actually paying for a steer? I have know idea what they pay. Something like 75% of sales are done through private negotiated contracts. The new Cattle book bill should shed some light on things but will probably take years. You definitely can't go by the "packers record profits" line. Heck we are making record profits at the business and the ranch but both are still barely getting by. The only reason we have records profits is because we finally got both paid for. If you want more for your product don't sell it until you get your asking price.

In the case of Tyson they are a publicly traded company. Their profit on beef is 26%. For reference pork profit is 4% and chicken is -8%

 

[Lucky]

In the case of Tyson they are a publicly traded company. Their profit on beef is 26%. For reference pork profit is 4% and chicken is -8%

Oh well if they are at 26% we should definitely fight to have the government regulate them. Or maybe we should find out what their doing and implement it in our own business. I listened to a man say he sold 2 400# steers for $650 each the other day. He was happy with that but then started in on the packers. Those steers didn't go to a packer. They probably got sold 3 more times before they went to a feedlot and then to a packer and from there to grocer who sold it. All parties involved were trying to make money. I had around $600 a had in my yearlings last year. That's raising them from babies to backgrounding them for 6 months. The steers brought $1,237.50 at the sale. That's a touch over 26% , should I be regulated? I'm not saying the packers are on the up and up but everyone looks through the one way window and thinks the next guy is killing it without knowing what's going on. The main thing that bothers me though is people complaining but not putting in the time and effort to improve or being scared to hang it out there and gamble it all to better themselves.

Some people sit on the couch because their lazy and some can sit on the couch because they put their time in. I've ask on here several times what an acceptable per hd profit is but I've never got a real answer.

 

[Ky hills]

Oh well if they are at 26% we should definitely fight to have the government regulate them. Or maybe we should find out what their doing and implement it in our own business. I listened to a man say he sold 2 400# steers for $650 each the other day. He was happy with that but then started in on the packers. Those steers didn't go to a packer. They probably got sold 3 more times before they went to a feedlot and then to a packer and from there to grocer who sold it. All parties involved were trying to make money. I had around $600 a had in my yearlings last year. That's raising them from babies to backgrounding them for 6 months. The steers brought $1,237.50 at the sale. That's a touch over 26% , should I be regulated? I'm not saying the packers are on the up and up but everyone looks through the one way window and thinks the next guy is killing it without knowing what's going on. The main thing that bothers me though is people complaining but not putting in the time and effort to improve or being scared to hang it out there and gamble it all to better themselves.

Some people sit on the couch because their lazy and some can sit on the couch because they but their time in. I've ask on here several times what an acceptable per hd profit is but I've never got a real answer.

Some truth to those thoughts, but a lot more things at play. The system itself has been set up with the actual cattle producers and then the feeders absorbing the majority of risk.
There is little to no profit for most folks to have enough to absorb anymore cost and loss of trying something new.
It frustrates me when some people act as if when someone is venting about the situation that they are somehow lazy or stupid or what ever.
I will use our own outfit as an example.
I'm one of the few full time livestock producers. Probably a lot of hobby folks are bigger than we are but that's just how it is.
I've tried to play the game the way different folks have advised over the years. There is always a bar that keeps moving. You think it's in sight and your gonna get there aaand it moves.
There should in my opinion be a different marketing setup where those that want to can have access to direct beef sales without the regulations and inspections. If things were done on a local basis our smaller local farmers could still supply a lot of product within their local and regional areas, and it could still save consumers some money by cutting out the steps along the way. I firmly believe the end product would be just as safe or safer than the current system.
I realize that that is not for everyone and the existing system would still be an option.
There should be less regulation thus making it easier for farmers to sell direct to consumers.

 

[GoWyo]

Don't forget that the US beef herd was expanding from 2014 through 2020. Now cows are being liquidated with the drought and calf crops in 2022 "should" be a bit smaller. Demand for beef has been strong. Barring more black swan events, fats should hold some ground. Packers have had the leverage because there has been a plentiful supply of cattle. If grain prices stay high and farmers sell out cows to focus on grain farming, things are looking up for us producers who run cows on range and don't have crop ground. High grain prices lead to high cattle prices even though it seems counterintuitive.

 

[Lucky]

I would be all for a local marketing strategy KY Hills speaks of. The end consumer would have a much better product, the calves would be less stressed, and the overall impacts of sickness from trucking and comingling Cattle would be greatly reduced. I think we would still have the same issue though. I know allot of producers and maybe 5% want to mess with weaning or backgrounding these calves correctly much less keeping them until they are ready for a butcher. It's like they see a few dollars walking around and it's burning a hole in their pocket. Most sing the same old song about not being able to afford it or not having the facilities. So if the producers aren't willing to change what they are doing which, I believe most have proven an unwillingness to change. What good is a different end product marketing strategy going to do? Again it goes back to the one way window people look through.