BURLEY, Idaho — While cattle prices are expected to soften in the last half of the year, average annual prices for feeder and fed cattle in 2015 are expected to be even higher than the record-breaking 2014.
The U.S. cattle supply is still tight, and beef demand is strong, said Jessica Sampson, ag economist with Livestock Marketing Information Center, during last week’s Idaho Range Livestock Symposium.
Returns on cow/calf operations in 2014 were more than $500 per cow, and producers can expect another good year, she said.
Southern Plains 500 pound to 600 pound steer calves are selling close to $290 per hundredweight. Last year’s annual average price on those steers was $245 per hundredweight. LMIC estimates the 2015 average between $270 and $275 per hundredweight, she said.
Sterling Marketing of Vale, Ore., puts annual average returns to cow/calf operators at $548 per cow in 2014 and estimates those returns to rise to $688 in 2015.
Cattle prices in the first quarter of 2015 were higher than the same period last year and are expected to peak in the first half of the year. LMIC forecasts prices to move slightly lower in the second half, with year-over-year declines but no sharp drops, Sampson said.
Cattle producers are holding back cows from slaughter and retaining heifers, but there’ll be a lag before the associated beef increases are realized, she said.
Fed cattle prices have softened to about $160 per hundredweight after reaching a high of $172 per hundredweight last year. The average annual price in 2014 was $154 per hundredweight with annual feedlot returns averaging about $35 per head, she said.
This year’s annual average price should be about $160 per head, but feedlots are experiencing significant red ink, with estimated losses more than $300 per head in February, she said.
“Feedlots have only dealt with this severe of closeouts twice before, during the summer of 2012 and late 2008,” she said.
Corn costs have crept up since the fall, but the real deal breaker is the high cost of feeder cattle placed on feed in late 2014 and the price they’re now selling for at slaughter, she said.
Breakeven on those feeder cattle is about $190 per hundredweight, and the current cash market on fed cattle is about $160 per hundredweight, she said.
LMIC expects breakevens to decrease in the coming months due to lower feeder cattle prices, but current forecasts put feedlots in the red for several more months, she said.
Sterling Marketing pegged last week’s feedlot losses at nearly $175 per head.
Cattle prices in all sectors will average higher this year but won’t match the double digit percentage increases of 2014, Sampson said.
Last year was a perfect storm for cattle and beef markets with strong demand and production issues in pork and chicken, which kept prices up for those competing meats, she said.
Total demand for U.S. beef increased 5 percent on volume despite a 12 percent increase in retail prices. Beef exports were up slightly but saw a double-digit percentage increase in value year-over-year, she said.
LMIC expects softer beef exports and surging pork and chicken production in 2015.