Beef: What's for dinner could cost more

Surging corn prices have made keeping livestock more expensive. That's likely to drive meat prices higher.

By Jeff Cox, CNNMoney.com contributing writer

NEW YORK (CNNMoney) -- Surging corn prices and a tough winter combined to make for leaner cows and pigs for livestock farmers - something that probably points to rising prices for beef and pork, according to experts.

Corn selling at $4 a bushel is making it too expensive to feed livestock as much as usual, so ranchers are bringing lighter cattle and pigs to market. The harsh winter, which made it difficult for livestock to graze and feed, also factors into the equation.

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Livestock weights are generally registering 10 to 20 pounds lower than usual in 2007, and analysts are drawing a straight line from rising corn prices - fueled by rapidly growing demand for ethanol - to the lighter livestock weights.

That could have a big effect on the nation's $70 billion cattle industry - and your grocery bill.

"There were, in parts of the United States, harsh winters. That's true. But the agricultural economists all say that with higher feed prices the cattlemen are not going to (feed the animals) as far as they normally would and they're going to be selling them sooner and lighter," said David Swenson, an economist at Iowa State University.

Swenson said less beef on the market this year will drive up price. Not only will there be less beef and pork, analysts said, but there also will be less supply of top-quality meat, meaning bigger increases for better cuts of beef.

Those expecting higher beef and pork prices aren't ready to say by how much. Mark Schultz, chief analyst at Northstar Commodity Investment in Minneapolis, predicted that beef prices will rise substantially. (For the latest commodity prices, go here.)

"I believe that beef prices are going to continue to work higher, and eventually by the time we get into late this summer to early fall I would not be surprised to see cattle once again near all-time highs," he said.

Others, though, offered a more tepid forecast.

John Harrington, a livestock analyst at DTN, which examines industry trends, attributed the livestock weight decrease more to the winter conditions than corn prices. While noting that a production decrease is possible, he predicted any price increase would be "marginal" and would happen only if the drop in livestock weights drags on for a longer time.

"I don't think we're at that level yet, but we certainly could be if the high-corn (price) scenario continues for, say, a year or so," Harrington said.

Similarly, Gregg Doud, chief economist for the National Cattlemen's Beef Association, an advocacy group for the roughly $70 billion beef industry, said his analysis has beef production flat this year without a significant price increase.

But as ethanol production and its corresponding need for corn escalates, prices for feed are expected to stay at current levels, meaning uncertainty for livestock farmers.

Clement Ward, an economist at Oklahoma State University, sees "lots and lots of unknowns" as livestock farmers look for direction.

Among them: How many acres are put into corn production, how much the government chooses to continue subsidizing ethanol production, and the ultimate unknown - the weather, which can cause wild fluctuations in crop prices.

As for the immediate future, Ward said, "we're just kind of treading in new waters right now."

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.