QUOTE AND NEWS
Japan Today  Jul 26  Comment 
Japan is likely to impose emergency tariffs on frozen beef from the United States starting next month in response to a spike in imports, a government source said…
guardian.co.uk  Jul 26  Comment 
Andronicos Sideras mixed horsemeat with beef at his business in north London as part of conspiracy A London businessman has been found guilty of conspiring to defraud customers by adding horsemeat to batches of beef and relabelling them as pure...
Financial Times  Jul 26  Comment 
Public outcry in 2013 after supermarket burgers were found to contain horse
Forbes  Jul 20  Comment 
High-grade wagyu cattle are fed Cadbury's chocolate, cookies and candy at South Australia's Mayura Station, making it some of the world's most sought-after beef.
Channel News Asia  Jul 17  Comment 
The agency's Food Safety and Inspection Service (FSIS) began inspecting all Brazil beef imports in March after a series of bad meat shipments were discovered.
Japan Today  Jul 17  Comment 
Taiwan has decided in principle to lift a ban since 2001 on beef imported from Japan, action taken following the discovery there of cattle with mad cow disease,…
Clusterstock  Jul 16  Comment 
The Jewish delicatessen is an iconic American institution. Nowhere else in the world will you find a local shop so focused on the preparation of beef by curing, brining, and poaching. Pastrami, corned beef, and brisket are usually the trifecta...
The Economic Times  Jul 11  Comment 
Between May and June, factory gate prices of chicken have gone up by 25-35 per cent.
Reuters  Jul 11  Comment 
India's Supreme Court suspended on Tuesday a government ban on the trade of cattle for slaughter, a boost for the multi-billion dollar beef and leather industries mostly run by members of the Muslim minority.
guardian.co.uk  Jul 6  Comment 
Andronicos Sideras is accused of involvement in 2012 plot to pass off horsemeat as beef A businessman has appeared in court accused of fraud over his alleged involvement in passing off horsemeat as beef in a plot “motivated by...




RELATED WIKI ARTICLES
 


This article is about Beef Prices in general. For the specific futures contracts, see the articles on Live Cattle Futures and Feeder Cattle Futures.

In 2007, the retail value of all US produced beef was $74 billion.[1] Beef prices depend in part on the availability and pricing of cattle feed. For instance, heavy droughts often result in the reduction of available hay stocks, so prices drop slightly as more cattle are slaughtered and sent to market. However, this reduces breeding stock, subsequently reducing supply and raising prices in the long term.[2] Reliance on corn cattle feed (especially distiller's dry grain--see DDG under Ethanol Production) also makes beef prices susceptible to significant changes in corn prices.[3]

The chart at left shows spot prices for Live Cattle on the Chicago Mercantile Exchange.

Who benefits from higher beef prices?

  • Tyson Foods (TSN), and Brazilian JBS S.A. (SAO:JBSS3), owner of Swift Foods, examples of major public beef protein processors (they hold 24% and 18.5% of US market share, respectively), benefit when beef prices rise.[4][5]
  • Smaller, private beef producers and processors, such as Cargill Meat Solutions, with 21% of US market share, and National Beef, with 10.5% of US market share, also benefit when beef prices rise.[6]
  • AspenBio Pharma (OTC:APNB), Alpharma (ALO) and other manufacturers of livestock pharmaceuticals benefit from higher demand for cattle, which results in increased demand for the high-yield drugs that AspenBio manufactures.

Who benefits from lower beef prices?

Historical Beef Statistics

Trends and Forces

Increase in Feedstuff Prices Increases the Price of Beef

Beef Prices are heavily dependent on favorable pricing of feedstuffs, such as corn prices and soybeans, as food makes up the majority of the cost of raising livestock. Corn prices have risen sharply since the beginning of 2007 - more than 60% in 2007 and early 2008 - as ethanol producers have increased their demand for the commodity (rising oil prices, in turn, have increased demand for ethanol).[10] Corn is also the main input for many other food products such as high fructose corn syrup that are in increasing worldwide demand - but nonetheless the USDA expects U.S. farmers to plant 8% less corn in 2008, lowering supply and increasing prices.[11] Any long-term, significant increase in feedstuffs prices has the potential to seriously increase beef prices.

Rising Global Demand Pushes Up Beef Prices

In 2007, beef consumption rose at an annual rate of 5% in developing countries.[12] From 1990 to 2007, per capita consumption of meat doubled in China - 1.3 billion people ate twice as much meat as they did before.[13] As global demand increases, prices are pushed up and meat becomes more expensive.

Cattle Supply is Dependent on Weather Conditions

Farmers depend on forage - grass and wheat - to feed cows during the summer and fall. During droughts, not enough forage grows to feed the cattle and farmers are forced to dip into their winter hay reserves to feed their herds. In order to make sure they have enough hay for the winter, farmers send surplus cattle to market, increasing supply in the short term, but reducing breeding stock and decreasing supply in the long term.

Import Bans Decrease Supply and Increase Prices

When health scares, such as cases of mad cow disease, cause the United States to ban cattle imports from other countries, US supply shrinks and beef prices increase. For example, the 2003 ban of Canadian cattle imports decreased US supply by 8% and contributed to a 30% rise in cattle prices.[14]

Beef Industry Market Share

Tyson Foods (TSN) is the largest US producer of beef with 25% of the US market.

Cargill Meat Solutions is the second largest US beef producer with 21% of the US market.

Swift Foods, which is owned by Brazilian meat producer JBS S.A. (SAO:JBSS3), is the third largest US beef producer with 18.5% of the US market.

National Beef is the fourth largest US beef producer with 10.5% of the US market.

Note: Market share data from NWA Online

References

  1. U.S. Beef and Cattle Industry: Background Statistics and Information
  2. Drought loss expected to reach $30M for six-county region; feds could issue disaster declaration
  3. [1] Corn Prices Near Record High, But What About Food Costs?
  4. [2] Tyson Foods: Overview
  5. [3] Beef Losses Prompt Cutbacks
  6. [4] Beef Losses Prompt Cutbacks
  7. http://www.breakthechain.org/exclusives/mcbeef.html
  8. Chicago Business, "Kraft, Sara Lee face rising beef and pork prices"
  9. [5] U.S. Beef and Cattle Industry: Background Statistics and Information
  10. [6] National Corn Growers Association Futures Quotes
  11. [7]|"USDA Bets on Soy, but Farmers Like Corn"
  12. [8] More wealth, more meat. How China's rise spells trouble
  13. [9] Meat demand in Asia fuels higher food prices
  14. [10]The price of beef becomes hard to swallow
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki