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Why cattle markets are having a cow

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February 02, 2011 – Comments (4) | RELATED TICKERS: MOO

The mainstream media is really beginning to pick up on the rising food prices story that we have been talking about here for several weeks now.  Here's another article on the subject, this one specifically focusing on how beef prices are sitting near their all-time high.  I still think that this trend is very bearish for restaurants.

There are plenty of other places to point the finger if you want to assess responsibility for record livestock prices. You can start with wrongheaded U.S. energy policy, tightfisted herders and soaring food demand...

Raising cattle is also more land intensive than farming chicken or pigs. Cattle producers thus find their decisions complicated by factors like surging land prices -- and by America's insane embrace of corn-based ethanol as a motor fuel..

The government's ethanol subsidy has taken millions of acres out of feed production and put it into inefficient biofuel production, right at a time when global food demand was lifting off. The "ethanol juggernaut" is part of what's behind the near tripling of corn prices since 2006, Peel says.

You'd think that development might send a signal to Washington that what it's doing isn't working, but you'd be wrong. The government recently cleared the use of cars that use fuel containing half again as much ethanol as previously permitted. With oil prices rising under the same global demand pressures felt by agriculture, there is no sign of relief for the rising prices on grains.

Why cattle markets are having a cow

http://finance.fortune.cnn.com/2011/02/02/why-cattle-markets-are-having-a-cow/

Deej

4 Comments – Post Your Own

#1) On February 02, 2011 at 2:36 PM, leohaas (32.73) wrote:

Yet another excellent pitch for MOS, POT, and AGU!

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#2) On February 02, 2011 at 3:13 PM, TMFDeej (99.27) wrote:

Very true, leo.

Deej

Long MOS, SYT, DD, CF, & MON

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#3) On February 02, 2011 at 7:07 PM, OneLegged (< 20) wrote:

I attended a cattle auction with a rancher buddy a few weeks ago.  I can atttest that prices are going nowhere, but up.  The highest price at the auction was for a lot of about 115,  438 pound steers.  On-the-hoof they sold for $1.79 per pound.  That is big money.

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#4) On February 02, 2011 at 7:07 PM, OneLegged (< 20) wrote:

These steers where all grass fed.

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