Cattle Market Snapshot
Posted on: Jul 15, 2017
Each quarter, Northwest Farm Credit Services publishes market snapshots for a wide variety of industries including the cattle industry. Their latest release of the national market provides valuable insights to changes in supply and demand.
In the first six months of 2017, fat-cattle prices were higher due to increased slaughter rates and lighter dressed weights.
Cattle prices were driven up by a short-term supply shortage for all classes of cattle in the first half of the year. It is expected that there will be an influx of cattle later in the summer, which will drive prices lower than last year.
Prices for feeder calves averaged $139.27 through April and strengthened in through May. Fed-cattle prices have been increasing since October 2016. Since then, fed-cattle prices have increased 33.3 percent. Prices for 550- and 750- pound steers have increased 34.9 percent and 26.2.
Northwest Farm Credit projects that fed-cattle prices could be pushed lower going forward in 2017 as the tail end of the 2016 holdover calves come to market alongside the 2017 calf crop in fall 2017.
Annual beef production for 2017 is forecast to be up 4 percent over 2016 production. The inventory of cattle is approximately 31 million head in the first half of 2017, which represents an increase higher than the last several years, but still below the 30-year average inventory.
Pork production is forecasted to grow 2.8 percent from 2017 to 2018, which will likely result in a 2 to 3 percent decrease in price in 2018. Chicken production is projected to grow 2 percent.
The international cattle market is undergoing large shifts.
In June 2017, the U.S. and China came to an agreement that will open up China’s $2.5 billion export market to U.S. beef producers. This agreement ended a 14-year ban of air shipment of U.S. beef to China imposed in 2003.
Also in June, the USDA decided to end the import of fresh Brazilian beef.
Increased demand for U.S. beef overseas and a weakened U.S. dollar combined with the new trade agreements has increased and will continue to increase U.S. competitiveness in export markets.
Feed costs are expected to stay stable through the summer except for in Eastern Montana and most of North Dakota where a severe drought is persisting. In these areas, hay prices are on the rise. As a direct result of the drought conditions, auction barns in the Dakotas and Eastern Montana are reporting an increase of 1,000 to 1,300 head per week.
A newly opened processing facility in Kuna, Idaho is positioned to serve producers of 1.2 million dairy and beef cows in the region. The Caviness Beef Packers and J.R. Simplot Co.’s facility created 700 jobs and processes 1,700 head per day.
On a smaller, but still regionally significant scale, Wyoming now has its first USDA-inspected full-service meat processing plant in the state in over 40 years. The new facility in Cody, Wyoming will allow more ranchers to sell their ranch across state lines and market their beef as “grass fed” and “natural.” Prior to this new facility, the lack of USDA-inspected facility in the local supply chain left ranchers with limited choices to either slaughter their cows at a stat-inspected facility, a choice which limits them to an exclusively in-consumer market or sell their cattle to a feedlot, which ultimately feeds into the nations’ bulk meat supply. Currently, the new facility in Cody owned by longtime rancher Frank Schmidt can only process ten head a day, but hopes to expand in the future.
Post Categories: Industry News