Cattle prices fuel optimism

The old water tower falls onto its side.

For the cattle industry, that long-awaited day has finally arrived: prices for fat cattle are at historic, all-time record highs. Following a terrible year in 2002, the price has steadily risen, reaching profitable levels early in 2003, and continuing to climb throughout the year. The historic peak -- $92.60 per hundredweight for fat cattle -- was reached this week, with even higher prices possible in the days to come. "There's never been a time when prices were at higher levels," said Norm Timmerman of the Timmerman & Sons cattle feeding operation between Indianola and McCook. "We used to think that $80 per hundred was a good price. But $90? That's unreal." The reason, pure and simple, is supply and demand. Following the drought conditions of the last two years, cow-calf operators stripped their herds down to bare minimums, keeping only a core number of cattle. At the same time, beef demand was rising. The Atkins' diet -- which advocates a meat-centered high protein meal plan -- has skyrocketed in popularity, and, simultaneously, steaks are becoming the "in" thing for young urban professionals.

This trend has been accelerated by the national groups of eating establishments -- such as Outback, Appleby's and Hooters -- who feature beef entrees as a staple on their menus. Locally, the high prices for cattle have brought increased action at the sale barn. Gayle Ruggles at Tri-State Livestock Commission Co. said the West Sale Barn had between 2,200 and 3,000 cattle Monday, with expectations of up to 4,000 next week. The story was similar at Midwest Livestock Commission, where Ryan Rogers said cattle numbers in recent weeks have been on the rise.

While the profits are nice, the high prices also create a dilemma for beef producers. "Do we take our profits and run, or do we plow money back into more steers?" The question is a crucial one because calf prices are at record levels, too, topping $130 for some 400-pound calves and hitting a $100 per hundredweight for 800-pound steers. Those are costly questions, because cattlemen won't know for four to five months how they'll come out on their investments. For now, things look good. One of the most encouraging developments is that cattle are being bought ahead of time, with buying taking place now to fill October orders. If that keeps up -- with November cattle bought in October, and so on down the line -- the high prices in the cattle market could be sustained through the end of the year, and possibly beyond.

Yes, prices are high, putting somewhat of a damper on steer purchases to feed for future delivery. But Timmerman expects demand -- for beef consumption and feeding stock -- to remain high. "We (cattlemen) are eternal optimists," he said.