2014 outlook bright for beef producers
Carol Ryan Dumas
Tightening beef supplies and strong global demand will keep prices high for cattle producers. Improving pasture and range conditions in many cattle-producing areas and lower feed grain prices will incentivize herd rebuilding in 2014.
BURLEY, Idaho — A tightening cattle supply and strong global demand for beef will keep cattle prices elevated through 2014, according to one industry insider.
Drought in 2011 and 2012, which sent additional cattle to feedlots, exacerbated the declining trend in the U.S. cattle inventory. Cattle numbers on Jan. 1, 2013, were down 1.6 percent from a year earlier and down 16.2 percent from Jan. 1, 1997. The U.S. inventory is expected to be down another 2 percent at the start of 2014, said Casey Bieroth, risk analysis coordinator for Boise-based Agri Beef.
In addition, improving pasture and range conditions in many cattle-producing areas will see fewer cattle headed for feedlots and more heifer retention as cattle producers begin to rebuild the national herd, Bieroth told producers at the University of Idaho ag outlook seminar in Burley on Dec. 11.
Tight feeder cattle and calf supplies will continue for at least another two years before any real herd expansion can be realized. That will keep the beef supply tight through 2015, he said.
U.S. feeder cattle and calf cash prices are record-high in the high $160s and mid $180s per hundredweight, respectively, and should be supported through 2014. Lower feed grain costs will support both herd expansion and the feeder prices from feedlot owners, he said.
Producers in the Northwest, where prices are lower than the U.S. average, should expect feeder cattle prices from $150 to $155 for most of 2014. Fed cattle prices should range from the mid $120s to mid $130s per hundredweight, he said.
Tight supplies are going to favor higher prices until the U.S. cattle herd expands, but there will be regional challenges for Idaho and surrounding states. The region is still suffering from drought and tight forage availability and is burdened by environmental issues, such as sage grouse recovery, he said.
Country of origin labeling also presents challenges to packing plants in the region, making it difficult to commingle cattle from Canada. Overcapacity in packing plants and feedlots nationwide will also continue to be a challenge.
In addition, tight beef supplies and high retail prices will test domestic demand for beef. The per-capita U.S. beef supply is hovering around 50 pounds, well below the average 85 pounds in the 1970s, he said.
That will keep retail beef prices high, and it will be a victory for the industry to hold its ground against competing proteins, which are relatively cheap. High retail prices will limit featuring of beef in grocery stores, and a tough economic recovery in the face of concerns over a government shutdown, healthcare unknowns and personal and government debt won’t help domestic demand, he said.
International demand has been a bright spot, however, and continues to show room for U.S. export growth. Exports in 2012 and 2013 were above the five-year average, and Asia’s taste for beef is rapidly expanding and will present growth opportunity for U.S. beef for some time to come, he said.
Some challenges do exist, however, including being shut out of the large Chinese market due to the lingering bovine spongiform encephalopathy issue, Russia’s ban on U.S. beef due to the use of ractopamine and the increasing value of the U.S. dollar.