The drought will affect us for years
Cattle herds are the smallest in two generations. The resulting spike in beef prices will cause Americans to eat less meat.
The immediate realities from the drought are these: Cattle herds are the smallest in 39 years and beef prices are at record levels, Bloomberg reports.
But the impact will last for a while. Fast-food chains are raising prices. Food could cost as much as 4% more next year, and beef prices may rise by 5% -- more than any other food group. The end result? The average American will likely eat less than 200 pounds of red meat and poultry next year. The last time that happened was in 1990.
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It will be years before things return to normal. The number of calves produced has been sharply cut. Feed prices are so high that some farmers have sold heifers instead of breeding them, and so there won't be as much cattle for packing plants next year, Bloomberg reports. It takes calves about 20 months to grow large enough to slaughter.
America may be dealing with declining herds until 2016 or 2017, one USDA livestock analyst reported, according to Bloomberg.
The problem isn't just with the price of corn, which has skyrocketed 64% since June 15. The drought has also destroyed grasses across America's heartland -- and the grass is what cattle feed on before moving to a largely corn-based diet at feedlots, Bloomberg reports. In fact, 59% of U.S. pastures have been rated "poor" or "very poor."
Wendy's (WEN) has already said it will selectively raise prices as it deals with higher beef prices. Other fast-food chains have been warning of similar actions.
Meat producers will likely also feel the pinch, including Tyson Foods (TSN) and Pilgrim's Pride (PPC). And supermarket chains will be pressured to keep meat prices competitive, which has some analysts casting doubt on supermarket stocks. Jefferies cut its rating on Safeway (SWY) Thursday to "hold" from "buy" and cut its price target on the stock to $17 from $21.
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my wife, my son and I are a true family farm. we do all of our work and hire no outside labor. the drought the last 2 year is epic in its proprtions. our annual rainfall is 20 inches. we have had less than 10 inches in 2 years. I am so sick of people in this counrtry that are griping about farmers that get paid for not planting. we are no longer paid to not plant ,and have not been paid to do so for the last 20 years.with prices for grain at all time highes and government payments at all time lows we wo uld plant plant every acre we have under normal conditions . most of the usda budget is directed towards food stamps,wic,etc. we have no free ride and our efforts have given the U.S the cheapest food supply in the world. quit listening to the news channels about how the farmers are getting rich at your expense .we are not.
Being involved(in past) in farming/ranching and friends and relatives that have been....Don't Panic.
If we have a 4-5 year cycle of drought or too much rain/floods....Then worry a little more.
Farmers have never had it easy,never perfect and the best we probably have had is "middling."
Farmers in America are a resilient bunch..
Takes a 16-20 month turn around on cattle..
Takes about 6-9 month turn on hogs.
And chickens take less......"Eat mo' pig and chicken"..Your favorite "Perma Bull" (investor)
Don't let the Media scare the bullshidt out of you.
But your bread and biscuits, might be more for awhile...
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All hail the bull market, which ended the week with a big rally. But it also is starting to look a little like 1987, which suffered an epic blow-out.
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