Wednesday, December 10, 2008

Where's the Beef?

Some readers may recall that last spring, I warned that later this year, livestock prices would rise because ranchers had reduced their herds. This phenomenon appears to be occurring now. This wasn't really a prediction, but rather, a natural consequence of smaller herds and higher feed prices. 1+1 =2! Smaller supplies were likely to lead to higher prices eventually. Now, although feed prices have dropped by 50-60%, the smaller herds are likely to lead to higher meat prices.

"Cattle prices rose for the second time in two days on signs that the shrinking U.S. herd may limit beef supplies next year. Hog futures declined."

Here is the Bloomberg article.