What Factors Affect Hanging Beef Prices?


Quick Answer

Hanging beef prices are affected by supply and demand, as are all commodity prices. In 2014, U.S cattle prices skyrocketed when the cattle industry underestimated the strength of the economic recovery and the buying power of the U.S. consumer.

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Full Answer

Hanging beef prices are also influenced by price trends in other meats. In 2014, a rampant pig virus reduced lean hog supplies substantially, leading to higher pork prices. This may have increased demand for beef. Although rising prices often curb demand, this does not always hold true. The price of hanging beef is also affected by increases in the money supply and inflation

Droughts can indirectly cause hanging beef prices to rise. A drought can raise grain prices, making cattle feed more expensive. To maintain their revenues, cattle farmers raise prices and pass on rising costs to the consumer.

Even cattle industry experts are occasionally at a loss to explain all factors affecting hanging beef prices. Although they use their best judgement, these experts must often rely on guesswork. After deciding to breed more calves, it takes at least one and a half years before the additional cows are ready for market. For this reason, it can take quite some time for skyrocketing hanging beef prices to even out.

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