Beef is a very cyclical industry, largely driven by the fact that it takes nine months to create a new calf, and another year or two (at a minimum) to bring it to market and process it. Because of the difficulty of predicting demand that far out, plus the difficulty of matching supply to that demand, we end up with big swings in prices in every five-to-10-year cycle.
Right now, we are at the price peak in the cycle. The only way to bring prices back down is to increase the supply, and that can only happen when farmers choose to retain cows to breed and grow the stock instead of selling them today. This is called heifer retention. When prices are high, farmers want to sell stock. When they’re low, farmers want to hold back the stock.
That’s the revenue side. Then there’s the cost side. Beef costs are driven by the three F’s: feed, fertilizer, and fuel. Right now, the costs of all three are through the roof.
