Wednesday, July 18, 2012

Weather Hits Meat Prices

Globally, the weather is more favorable for agriculture than it has been in years. There is no major country whose heartland is on fire or under water.

The location of this year’s hot weather and drought, though, right in the center of the United States, will make it more noticeable to U.S. consumers. The drought-stricken areas grow mostly feedstocks fed to cattle, pigs, and chickens. The production of these products can only decline with the shortage of feed, resulting in higher prices across North America. Regionally, milk prices will go up also, as some milk will have to be trucked in from other states. Prices may not go up much right away, but beef prices could easily be up 10 percent from last year at the end of this year, and prices will continue to go up next year as herd sizes shrink to match the availability of feed.

Corn crops fit for human consumption are more resistant to the effects of dry weather, and increases in grain prices in general will not be noticeable in the prices of manufactured food products. So while you might see economists generalize about food prices being affected by the weather, it will mainly be the prices of meat that go up.