Economist: Beef Prices Could Stay High Into 2015

Published 07/24 2014 05:02PM

Updated 07/24 2014 06:18PM

TREMONT - David Uhlman has been working on the family farm since the 1960s. For years, they raised hogs, but around 2000, the focus turned to cattle.

Since then, the herd has grown from about 25 cows to 100. That decision has become especially lucrative the last couple of years.

"I would compare prices for the beef industry to be as high as they've ever been, that I can ever remember,” said Uhlman. “And I know my father would say the same.”

Uhlman says his herd has stayed relatively steady throughout the years, but an unexpected winter snowstorm in the Dakotas and a summer drought in Texas have reduced the population elsewhere.

"It's been 50-60 years since our beef numbers have been this low in the United States. So, that is what's really behind the high prices,” said Michael Doherty, a senior economist with the Illinois Farm Bureau in Bloomington.

"I would hope it would stay up for my benefit,” said Uhlman.

A harsh drought swept the Midwest during the last two summers, and the price of corn skyrocketed. In turn, the cost of feeding and raising cattle gradually started to climb as well.

"We're seeing the collapse of the corn prices, and eventually that's going to result in lower beef prices, but the consumer has a long ways to wait until they see them,” said Uhlman.

"I'm putting cheaper feed into these cattle, and I'm getting a higher price for them also. So, yeah, it's a good time right now,” said Uhlman.

By mid-2015, Doherty says if the demand for beef drops, and cattle inventories climb again, the prices may start to cool down.

"It does ebb and flow. I'm used to that as a farmer,” said Uhlman.

Doherty says the U.S. increased its export rate of beef by 40 percent last year. He expects those numbers and other exports will now drop because prices are getting so high.

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