SAN ANTONIO, Texas — Cattle prices made 2014 a year to remember for producers across North America, but the tide is expected to ebb, say market analysts from Cattlefax.
It is likely to be another stellar year for those in the cow-calf sector, but feedlots holding high priced inventory may start to feel downward pressure, said Randy Blach, chief executive officer of Cattlefax, during a market forum at the National Cattlemen’s Beef Association convention in San Antonio.
Margins will tighten as too many feedlots chase a limited supply of cattle, he said at the annual Cattlefax forecast on Feb. 5.
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Risk management is critical for what is expected to be a volatile year. More are taking advantage of contracts and other pricing formulas, where they must hit certain quality specifications from packers. Only 20 percent of all the fed cattle in the United States will be sold in the cash market in 2015.
It was a good year for meat producers around the world, where record prices were enjoyed everywhere. Retail prices for beef, pork, poultry and milk were up globally.
“When we look at these 2014 record prices, these were not just a U.S. issue, this was a global phenomenon,” said analyst Brett Stuart.
Prices will remain good this year, but the analysts believe the market peaked at the end of 2014.
“Not that we think this year is going to be a disaster. We think prices are going to be very strong, but we need to recognize we’ve got a trend change in place because of bigger beef supplies in the future and bigger meat supplies today,” said Kevin Good.
The most recent U.S. Department of Agriculture cattle inventory report indicated some expansion is taking place with fewer females going to market. However, the results will not be seen until 2016 when their calves start to hit the ground.
Cattlefax predicts a 550 pound calf will range in price from $235 to $290 per hundredweight and could drift lower in the fall run.
A 750 lb. steer could trade from $195 to $240 per cwt., an increase of more than six percent over 2014.
A finished steer could average $157 per cwt. with a price range of $140 to $170. Cattlefax expects negative feeding margins for the first half of the year with improvements in the last two quarters.
Cows should trade from $90 to $125 per cwt. because the demand for lean grinding meat remains strong.
The annual convention runs from Feb. 3-7, where more than 7,200 were registered.
Contact barbara.duckworth@producer.com
