By Dr. Derrell Peel
It's a hot time in the old town tonight, especially if you are cattle producer and you're stopping by the local sale barn. Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel says these high cattle prices have caught a lot of folks by surprise.
"Markets at a record levels, feeder cattle prices, fed cattle, box beef all pushed out the spring highs," Peel said. "And so this is something that really wasn't anticipated."
"Slaughter has continued to decline, beef production has continued to decline and obviously that is the major support for these prices at these levels," he said.
Peel is a guest of Ron Hays on today's Beef Buzz. With these record prices, There is a lot of concern about how demand will react to these higher prices.
"You know we've never been here before, so we are in uncharted waters, but the thing that may be a surprise to some, certainly a pleasant surprise, is that beef demand seems is holding up very well," Peel said.
"Both domestic demand and international demand seem to very robust," he said. "Markets I think are aware of the tight supplies and have sort of made up their mind to deal with those and so demand is holding up very well so far."
But with this prices, is there a top end to this market this summer?
"I don't think its a single number, its a continuum as prices go higher we ration people out of the market, but the reason prices go higher is cause we don't have as much supply," Peel said. "It's kind of natural process and I think its working."
"We really don't the demand curve looks like at up at these levels, cause we have never been here before," he said. "That's the part that is a little scary and certainly the part we are monitoring as we go forward."
"But the bottom line is, there is a lot of strong fundamental demand for beef and people are willing to pay to continue enjoying that," Peel said.
Looking ahead, Peel looks at the second half of the year. He says it's hard to predict if this market could continue to rise like it has so far this year.
"The last month has been more strength in the market than we anticipated, I really expect these markets to kinda top out," Peel said. "I don't see any real downward pressure in the markets at this point."
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