The Current Cattle Market Is ‘A Pleasant Surprise’
LMIC analysts encourages cattlemen to spend the money wisely.
CHEYENNE, Wyo. (Nov. 28, 2017) — “We’re pleasantly surprised with this stronger calf market compared to where we were a year ago,” said Jim Robb, director of the Livestock Marketing Information Center, of current calf prices. In addressing attendees at the 25th biennial Range Beef Cow Symposium (RBCS) hosted in Cheyenne, Wyo., Nov. 28-30, Robb told producers: “I hope you’ll use that money wisely.”
Robb noted that slaughter steer prices are also riding above a year ago. While cattle markets have not reached the highs that were seen from 2011 through 2015, Robb noted that 2017 has been a favorable year for all sectors of the beef industry.
“U.S. packers had their best year in history, so they wanted more cattle to kill,” he offered. “The markets pulled animals through the feedlot. Usually we are trying to push them through.”
This “market pull” scenario has occurred only twice in his career, the senior economist noted. “This is the only time it has lasted this long.”
As to the factors that have helped the market remain robust, Robb pointed to the retail sector featuring beef as an item to draw customers in and buy. He noted that with so many consumers now buying products online, retail grocers have recognized their fresh meatcase is a major leverage point.
He shared a story from major national grocery chain buyers who commented: “We’re surprised when we feature beef how it brings people in.”
“Be thankful you are that industry,” Robb told producers.
Robb credited the continuing growth in beef export markets, as well as domestic demand holding together, as additional factors that have helped bolster the positive calf and steer market prices.
Looking to the future, Robb shared that the calf crop is still getting bigger and is projected in 2018 to be the largest in a decade. He called herd expansion during the last couple years “unprecedented.” Robb projects 28 billion pounds (lb.) of beef will be produced in the United States in 2018.
Some projections peg it at 30 billion lb., he pointed out. “I don’t see that.”
That said, in the next couple years expansion is expected to continue, but the rate of growth is expected to slow down. Robb called beef’s future expansion pace “manageable” from a supply-and-demand standpoint, but said the concern will be the additional production and supply of pork and poultry.
“The biggest risk in the marketplace is the sheer volume of protein,” he stated, adding: “There’s going to be more [meat] out there, and the question will be, are we going to be able to swim our way through it?”
In offering an outlook on market prices, Robb anticipates with the abundant supply over the next two years that cattle prices will trend lower. However, by 2020 and 2021 he expects they may be stronger again.
Prepare and plan for the changing markets to mitigate risk, he advised. “Be prepared to swim upstream. As soon as the market turns, you’ve got to plan better.”
“The markets are changing and segmenting. Don’t lose sight of that,” he said in closing. “Cost of production is important, but do not give up quality.
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