DENVER — Contrary to published reports, industry experts said they do not expect beef prices at the retail level to be affected much as a result of regional storms that caused cattle prices to increase slightly.
Similar storms in previous years did not have much effect on retail prices, said Joe Schuele, spokesman for the National Cattlemen's Beef Association here and Kevin Good, senior analyst at Englewood, Colo.-based Cattle-Fax, a member-owned information organization serving producers in all segments of the cattle business. For example, they noted a 1997 storm claimed 30,000 head of cattle, but did not impact beef prices.
“Retail prices tend to be more stagnant,” Good said. “Retailers don't like to change their prices that much. There really isn't a good correlation to say we had a storm in the panhandle of Texas, Kansas and Colorado and because of that, the consumers are going to have to pay more for beef. That typically isn't the case.”
Other segments of the industry will eat the costs, Good said.
“It's the producer that tends to filter the cost, and actually right now, the packing industry is also affected,” he said. “You can see that in the reduction in slaughter levels or production in the past few weeks. They've gone dark a number of hours just because their margins aren't there. The middlemen are absorbing the loss. In this case, it's the producer, the feedlot operator and, to some degree, the packer.”
There have been serious problems with ice, sleet and power outages from Texas to Nebraska, which are major cattle-producing areas, Schuele said. As a result of the bad weather, it has been difficult and expensive to get feed to the surviving cattle, let alone increase their weight. Even though many cattle will survive, this will cause a delay in getting them ready for the market as well as increases in production costs and difficulty getting the cattle to achieve their expected weight.
“On the feedlot level, it is really going to depend on how passable the roads are and whether [the ranchers'] power has been restored in terms of getting them back into operations. For the ranchers, we're still in kind of a search-and-recovery mode,” Schuele said.
“So there's just been a kind of good news and bad news — the cattle that they've been able to find and get feed to are in pretty good condition, but there are an awful lot of them that have not been found and the window of opportunity to help them is narrowing pretty quickly.”
State officials have estimated 3,500 cattle lost in Colorado alone.
However, Good said the actual amount is probably higher, but it will be a while before ranchers find all the carcasses.
“In the feedlots alone, there have been several thousand deaths,” Schuele said. “The ranchers are not going to have a count on that for quite some time, so I don't think that we really have an accurate count on the death losses yet.”
The industry will eventually recover from this, the experts agreed.
“Where we're hit the hardest in the cattle feeding region, a lot of the cattle will just not perform as expected for the next 30, 60, 90 days,” Good said. “They're still going to be lighter than expectations, probably all the way into the spring, just because they've been damaged, so to speak. Then the next set of cattle that are placed, assuming there's no more [bad] weather through the end of the winter, you get more normal production out of them.”