Limited cattle supplies will keep cattle prices high next year, and a beef economist says high domestic beef demand and improving global opportunities are just a few reasons to expect near record-high profitability.
Scott Brown, University of Missouri beef economist, said the forecast for the cattle market over the next two years compares to the “golden era” of beef profits in 2004. Brown presented his outlook to producers at the annual Missouri Forage and Grassland Conference at Port Arrowhead at Lake Ozark earlier this month.
In addition to high cattle prices and low feed costs, demand in the U.S. and global markets is improving.
“International trade has been important. It’s really a bright spot when you look ahead for 2014,” Brown said. “So not only do we expect domestic demand for beef to be better as we look ahead to 2014, but the ability to move product into places like Japan, South Korea and China does nothing but continue to help us on the price side.”
His forecast was supportive for the industry, especially cow-calf producers.
His charts showed a sharp rise in live-cattle futures prices since 2010, from $80 per hundred to $135. Cattle supplies falling to a 61-year low has moved cow-calf returns from minus $25 per cow in 2009 to plus $25 in 2012. Brown told the group those returns could skyrocket to $300 per cow next year based on estimates from the Livestock Market Information Center.
Beef prices continue to improve and are expected to move an additional two or three percent higher next year, but the trend could change if consumers turn to pork and poultry as less expensive meat options. A rebounding economy and more disposable income will help keep beef on dinner tables across the country.
The outlook for 2014 and beyond is much more positive than the last four or five years, but profits could be affected if we face another unexpected drought.
“All bets are off if there is a drought in 2014.”
Brown added the expected profits in the cattle industry could benefit rural economies. As the money comes back to producers they’ll spend those dollars within their communities.