Beef Vs. Oil?

Dan Piller:

Retail gasoline prices have reached $4 per gallon on the east and west coasts and predictions abound that the rest of the country will suffer the same pain in a few weeks. Iowa’s prices remain in the $3.40 per gallon average.
Meanwhile cattle prices continue their flight into the market stratosphere, with slaughter-ready cattle up 18 cents per hundredweight to $128.90 and younger feeder cattle up 30 cents per hundredweight to $158.60. The high prices are caused by the smallest herd in the U.S. since the early 1950s and a surge in export demand.
Both cattle prices are up 25 percent from late 2011. Consumers who have seen hamburger prices rise by 20 percent at the supermarket last year and choice cuts up 10 percent or more are likely in for more increases and traders worry where the demand will begin to fade.
“The problem of consumer resistance to high beef prices will be partially influenced by ever rising retail gasoline prices. Having both prices work higher is not a good thing for beef,” trader Dennis Smith of Archer Financial Services in Chicago wrote Tuesday at the close of trading on the Chicago Board of Trade.
Jeff French at Top Third Ag Marketing in Chicago said “the cattle trade remains very concerned that high gas prices could kill domestic beef demand. The consumer does not have to eat beef but they do have to put gas in their vehicles to get to work.”

The large breeding stock selloff in Texas is going to continue impacting beef prices, at least until prices cause cattle numbers to increase.  Higher prices at the supermarket aren't good for cattlemen in the long term, but if somebody has fats to sell right now, things look pretty good.  But with consumers digging deeper for gas, something's got to give.