It appears that there’s no limit to what consumers will pay for beef, which is good news for cattle producers, markets indicate.

As of May 2, export sales were 25% higher than the previous week, with international interest not waning anytime soon.

“If anything, exports haven’t fallen as much as we need them to. That’s another thing keeping beef and cattle prices up,” said Chad Hart, Iowa State University Extension economist. “Even international demand is pulling back. The Asian market has been a great market for us. U.S. beef is exotic for them, which has benefits and challenges. They’re not used to eating beef like we do, so when they’re presented with a beautiful steak, we have to show them it’s OK to eat it medium rare.

“In a lot of Asian countries, that’s a warning sign to them, so we do have to work within their culture and practices with our product to show them it’s safe and delicious.”

For the week ending May 2, southern live cattle traded $4 to $6 higher and northern dressed cattle $8 to $10 higher.

“Cattle prices have been really strong across the board, whether you look at fed cattle, calves, you name it. We’re paying high prices for it, but there’s a lot of cost involved,” Hart said. “We’re seeing high costs, high prices and really strong demand. But you put tariffs on and that weakens international demand. That’s raised a lot of concerns about the U.S. economy with the possibility of a recession here.”

But the high price levels depend on strong demand for beef to maintain that support level, Hart pointed out.

“If you go back seven years then compare that to today, you’re looking at a very tight supply,” Hart said. “Everybody’s worried about that demand, even with all these swings in prices. But we’re still talking about $2 for fed cattle and $3 per pound for feeder cattle, so again, incredibly strong prices.”

“The U.S. herd size continues to shrink,” Hart said, “and we’re looking at a smaller herd as of the last cattle on feed report from the USDA. There’s fewer cattle on feed but producers have placed more cattle on feedlots through March compared to last year’s numbers.

“We’re still seeing a lot of heifers. One thing we’re watching is when do we start to retain those heifers, indicating a possible expansion is on,” Hart continued. “If you look at what’s in those feedlots for April, 38% were heifers, so that’s still a really high percentage. As we get back into expansion, that percentage will drop down to 23%. So when you have a female calf, you’ll decide whether to retain her to become a momma cow and produce calves or put her in the feedlot and become a steak. There’s still a lot going into the steak category.”

Hart said that many producers are relishing the higher beef prices due to the strong consumer demand, showing that the heifer is worth more as a steak, for now.

“The drought seems to be intensifying in the Southern Plains, so it’s hard to expand your cattle production there if you don’t have grass, so they’ll head to the feedlot. In Iowa, we’re picking up moisture, so that isn’t limiting cattle herds here. But where the drought is getting worse, that limits their ability to expand the herd,” Hart said.

One advantage for cattle growers is that feed prices have come down compared to a couple of years ago. The cost of hay bales has gone down in areas that have gotten moisture lately, as some are eyeing that first cutting of grass.

“Corn prices and soybean meal prices so far have come down, so lower feed costs have provided some relief. But if you can’t put your cattle out to pasture, even with lower feed costs, the other costs of raising cattle are up. If you’re buying animals to add to your herd, you’re paying through the nose for that,” Hart said. “As non-feed costs continue to spiral upward, that puts pressure on making sure we can capture the strength of lower feed costs when we can.”

While exports have backed off a bit, that’s to be expected when prices are high and there’s limited exports.