Cattle industry has bright forecast, but corn could play spoiler

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An AgriLife Extension Service economist says cow-calf producers can expect better prices this year than the high prices from last year, and even better numbers in 2015, unless next year’s corn crop gets in the way.

Dr. David Anderson, Texas A&M AgriLife Extension Service livestock economist. Photo credit: Blair Fannin Dr. David Anderson, Texas A&M AgriLife Extension Service economist shared his optimistic outlook for the cattle industry at the Central Texas Cow-Calf Clinic in Milano, Texas last week. Anderson says tight supplies will drive bids for calves over the next two years and producers should look for continued high prices.

“Tight supplies are underpinning the market. I think we are going to have higher calf prices than we did in 2013 and higher prices in 2015 than we did in 2014.”

Anderson predicts prices for 500-pound to 600-pound steers to range between $178 per hundredweight and $184 per hundredweight for the first quarter of the year and increase to $189 per hundredweight for No. 1 steers in the first quarter of 2015.

Although he shared a rosy outlook, he did raise caution about the role this year’s corn crop plays in the forecast. Producers are eager to expand herds while feed costs are low, but if crop farmers shift from corn to soybeans to take advantage of potential price runs, feed costs could increase.

“If the nation’s corn crop comes up short, that could drive up prices putting downward bid prices on the calves.”

Record crop yields have dropped corn prices to about half price compared to what they were in 2012. Corn prices Thursday fell to $4.12, which was $2.82 lower than a year earlier.

Limited cattle numbers are expected to raise prices across the board until producers have the opportunity to expand herds. Cattle on feed numbers, slaughter rates and beef production are all expected to decline over the next couple of years. Anderson expects beef production to fall six percent in 2014 and additional four percent in 2015.

The lower supplies are expected to keep beef prices high, assuming demand supports those higher prices.

“The question I get all of the time is when are people going to quit eating beef in reaction to record-high beef prices?” he said. “It hasn’t happened yet. We’ve had record prices for months and months, and I think they are going to continue to go up. We’ve seen a shift in the kind of beef we eat, but haven’t seen people giving up their hamburgers for pork or chicken. We continue to have slowly growing beef demand with a slowly growing economy. We could see it pick up for beef demand as the economy grows in the latter half of 2014. If you put tighter supplies with growing demand, I think we will be talking about higher prices in the years ahead.”

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