SIOUX FALLS, SD (AP)--A turnaround in depressed cattle prices could be enough to keep some struggling ranchers in South Dakota from going out of business.
"They've been talking for two years about how this thing would turn around. Finally, it did," said Richard Bornitz, of Carthage, who sold 225 feeder cattle last week. "Then it started to rally and it just kept it up. It might keep us on the farm."
December's preliminary all beef price was $78.10 per hundredweight, according to the state Agricultural Statistics Service. That's up $3.20 from November and up $18.50 from December 1998.
Steers and heifers posted similar gains.
Some of the price increase stems from low prices that ruined some beef farmers and forced others to reduce their herds. With fewer cattle in the supply system, demand was higher at slaughter.
And, for the first time in many years, consumer hunger for beef has strengthened.
That might be the most important reason for the recent rise, said Gary Mickelson, a spokesman for the meatpacking giant IBP, headquartered at Dakota Dunes.
Many farmers and ranchers believe IBP and a few other large meatpackers are now controlling market prices, often because they either own a growing percentage of animals before slaughter or have a guaranteed supply of livestock on long-term contract.
Packers argue price swings move with changes in supply and demand.
Increased consumer demand for beef during the last nine months can be attributed to a strong economy, more convenience products made with beef and an increased popularity of the meat, in part because of high protein diets, said Mickelson.
The improved demand alone added about $5 per hundredweight for slaughter-ready cattle during 1999, Mickelson said. That's about $60 more for a typical 1,200-pound steer.
The price swing has occurred without any significant changes in the meatpacking industry, Mickelson said.
"We've said all along that the most important issue facing our industry is demand and how to improve it," Mickelson said. "The turnaround, we believe, verifies that changes in price are not due to captive supply or industry consolidation. They're due to basic economics."
A solid market looks promising for the coming months, said Matt Diersen, an Extension risk management specialist at South Dakota State University in Brookings.
"The calf crop last year was down 1% from a year earlier. We've got fewer animals running through the chain right now," Diersen said. "That's the general cattle cycle."
Although slaughter-weight cattle have returned to profitable levels, the most dramatic price rise has been in younger, lighter-weight cattle purchased to be fed to slaughter weight.
Prices for those animals were so strong Jan. 6 at the Sioux Falls Stockyards that Humboldt farmer John Even left without buying any.
"I got to bid on a few, but other guys wanted them worse than I did," said Even, who buys cattle for a family feeding operation managed by his sons. "I think some of those guys have a short memory. They forget that prices go down."