Demand healthy for higher-end beef
Feeding $6- to $7-per-bushel corn is a tough pill to swallow. But, many ranchers are making that work not only via the recent rally in cattle futures, but also focusing on premium markets that can net even more profit per head.
"If we all of a sudden provide this better product to consumers, who all the sudden decide, 'hey, this is a better eating experience,' then all of a sudden we shift demand back towards beef," says University of Missouri livestock economist Scott Brown.
"This better product" is beef that grades higher on the USDA scale; Brown says taking the steps to raise USDA Choice-grade beef, for example, can prop up ranchers' bottom lines by not only hedging against rising input costs by netting more profit, but also opening new market opportunities.
“If we could actually grow demand, then we’d have a different way out of the very tough, high-feed-cost environment we’re in today," Brown says. “Being able to supply a product that isn’t as sensitive to economic changes is one way to reduce risk to producers."
And, with today's cattle prices, maybe that opportunity stretches beyond just the rancher's ability to pay their current bills. "Providing consumers a product they are demanding, is going to give [producers] a chance to expand the herd that otherwise wouldn’t have been there," Brown says.