On Wednesday, live cattle prices from the Chicago Mercantile Exchange spiked to their highest in almost four weeks due to drought.
Live cattle futures for October delivery went up by 1.47% to $182.60 per pound on September 06’s Asian afternoon session.
Supplies became tight as drought caused a reduction in the amount of available pasture for grazing. As a result, producers were forced to send more cows to slaughter for the past year.
According to analysts, consumers are still purchasing beef faster than expected. They measured expert demand but failed to measure domestic demand as accurately as they thought.
Also, they added that contracts hit record highs in the summer amid supply issues but traded sideways for weeks. Moreover, price gains increased some expectations that the market could move towards the upside.
Based on brokers, no confirmed cash cattle trades led to the spark of commodity futures’ rally. Other experts said there is potential for the market to refresh the contract highs despite the overall sideways trend.
On the other hand, boxed cattle beef prices as choice cuts declined by $1.91 to $313.57 per hundredweight. Select cuts fell by $1.93 to $287.61 per hundredweight, as the US Department of Agriculture (USDA) stated.
Beef Prices Rose due to Lower Cattle Count
In Texas, hay bale prices doubled in cost amid the extreme weather, which forced ranchers to sell cattle.
According to one of the farmers, the heat dries everything out and removes moisture from plants, causing stress among them.
Another farmer said this year has the weakest hay supply in 50 years. Over 60.00% of Texas is suffering from the severe drought.
Last year, farmers faced the drought by feeding cows with hay reserves. However, they could not do the same due to the unfavorable weather, which caused their hay supply to fall.
In addition, the USDA reported that the current cattle count hit its lowest since 1962. As a result, beef prices surged 25.00% higher than last year. It doubled its cost three years ago and is still climbing.
