Cattle futures shot into all-time highs again this week, reaching $1.58 per pound on Thursday. Prices continue to rise because of a shortage of animals stemming from the multiyear drought in the Great Plains that destroyed herds and their food sources. Ranchers have been unable to restore the beef supply quickly, since it can take over two years to breed, raise, and fatten cattle before they are market ready.
Despite fears that high beef prices could cause consumers to give up the red meat, there has been little sign of slowing demand as Americans continue buying burgers and steaks.
Cattle feedlot operators, who buy young cattle (feeder cattle) and fatten them with corn, were willing to pay more for the cattle this week as corn prices fell to a fresh four-year low. When corn prices drop, cattle producers can afford to pay more for cattle since their feed costs are lower. This helped push the price for feeder cattle near all-time highs as well, reaching $2.19 per pound on Thursday.
Natural Gas Sinks
Natural gas prices fell to an eight-month low this week, drooping as mild weather cut into demand. About a third of all electricity generation in the United States uses natural gas as its fuel source, and a lack of hot weather is keeping many people from cranking up their air conditioning.
Meanwhile, natural gas production continues to expand and is likely to reach an all-time high this year, according to government data.
After last winter's blistering cold sent natural gas stockpiles to ten-year lows, higher production and reduced demand was desperately needed to bring down prices for the precious fuel. Supplies now are returning to near-normal levels, which has sent prices tumbling from their February high of $6.49 per million British thermal units down to Friday's level of a mere $3.82.
Longer-term, prices may rebound as natural gas consumption increases from the utilities, transportation, and chemical production industries. Also, there have been calls for exporting American natural gas to Europeans who are desperate for a new source of the fuel. Right now, they are regretting their dependency on Russia to provide nearly 40% of Europe's natural gas.