Heat, Drought and the Cattle Cycle

News coverage of crop losses has actually has been pretty good. It has emphasized losses for consumers and gains for farmers, who are insured and get higher prices.

But why do they always call it drought?  I know rainfall is well below normal, but it's the heat too.

One interesting thing that I think I've brought up before on this blog:  In the short run meat prices can actually fall, as livestock farmers cull herds and some of their breeding stock.  Of course that blip in extra supply means less future supply and higher prices next year.  The resulting "cattle cycle" was historically emphasized by freshwater macro types looking for fundamental causes for business cycles.  I'll leave it to you to decide whether cattle cycles bear any resemblance to the macroeconomic business cycle we're currently experiencing.

Since the lifecycle is shorter, chicken prices will rise sooner, as will eggs and dairy products.  Retail price increases won't be huge, though.  Retail prices are still mostly made up of labor and transportation costs.


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