Tuesday, May 27, 2008

Meat Prices Set to Increase

I hope everyone had a great weekend. Mine was spectacular.

I have been saying this for close to 6 months now and really started pounding the table on it about 2 months ago. The article below is about beef prices. I think the rising prices will be acros the board in all meats.


Enjoy your next steak, because prices from Shanghai to San Francisco are only going up.

The highest corn prices since at least the Civil War, based on Chicago Board of Trade data, mean U.S. feedlots are losing money on every animal they sell, discouraging production as rising global incomes increase meat consumption and a declining dollar spurs exports.


Not since 1996, when corn reached what was then a record $5 a bushel, have cattle been this cheap relative to their primary source of feed. Cattle are the seventh-worst performer of the 26-member UBS Bloomberg Constant Maturity Commodity Index in the past year, a time when soybeans, oil and copper jumped to records. After adjusting for inflation, cattle are down 27 percent from their 1988 peak.


Feedlots lost money on animals sold for slaughter the past 11 months, including $139.56 a head in April, compared with a profit of $46.79 a year earlier, said Erica Rosa, an economist at the Livestock Marketing Information Center in Lakewood, Colorado. Losses were a record $169.80 per animal in March, and feedlots may not be profitable until after October, she said.

The result - cutting supply

As of May 1, feedlots held 11.1 million head, down 1.4 percent from a year earlier, the government said. Ranchers last year cut the number of young females they held by 3.5 percent to 5.67 million on Jan. 1, the second straight annual decline.

Even as demand increases.

Global demand for beef, pork and chicken may grow as much as 50 percent by 2020

The easiest direct way to play this is the ETF COW which is like 2/3 beef and 1/3 pork prices. I do not own this and have been looking at other targeted ways to benefit from rising meat prices. It is coming.

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