Spring 2012 cattle price outlook

Fed cattle prices tend to have a seasonal price trend and the spring is one of the bright spots to sell finished cattle as packers and retailer start to secure a supply of cattle and beef for the pending start of grilling season.

In 2011, there was about a $12/cwt increase in the price of fed cattle between February and the first week of April.  However, this year cattle prices are already “in the stratosphere” near a price of $125/cwt. Seeing a strong repeat price run-up as the one seen last year is not expected.

The futures market, which has exhibited extraordinary bullish optimism for the past year, is predicting only a potential $3-4 price rise in the next two months. This will result in another record high cattle price, but the markets are showing a degree of a new plateau trend. Cattle prices can only go so high before retail prices have to climb and consumers start to turn to cheaper alternatives.

What cattle producers, and in particular fed cattle marketers, need to consider in the second half of the year:  With bullish pressure already building up the market, this spring will not be a good time to market current cattle, but forward pricing cattle to be marketed later in the year.

Usually the best time to forward price cattle to be marketed in the future is when the current cash price is at peak.

• During the spring cattle price run up, consider forward pricing strategies for the coming year.
• The bullish pressure of the market is already evident in the futures price.

Demand is strong enough to endure the weight of current prices, but pushing prices even higher may be difficult.

Source: Shane Ellis, ISU extension program specialist