Will the cattle market keep sliding in 2016? Could there be a rally? See what the analysts from CattleFax have to say.

Each year CattleFax shares outlooks for what could come in the near and even distant future during the Cattle Industry Convention. For 2016, beef producers can expect increased production from a growing cow herd. Domestic demand could fall, but if the global markets can stabilize exports should bounce back while imports decline.

Here are some of the facts and projections shared by CattleFax:

  • Cycle highs for cattle prices were reached in fall of 2014, while cattle supply reached cycle lows in Sept. 2014 to May 2015
  • Beef exports were down 1.5 billion lb. in 2015, a loss of $2.9 billion from the previous year
  • Beef exports and hide/offal values dropped almost $200/head combined in 2015
  • If country of origin labeling had gone through it would have cost beef producers $10-$12/cwt
  • Overall, meat and poultry saw their largest supply increase for the domestic market since 1950
  • Prime cuts of beef were up 20% in production, while Select cuts dropped 21% and Choice climbed 4% in 2015
  • The U.S. cow herd added 600,000 head in 2015, this year could see a 1.1 million cow increase
  • Fed dairy cattle made up 21% of cattle on feed in 2015
  • Carcass weights increased 20 lb. last year, there is only a 1 lb. increase expected for 2016
  • From Oct. 2013 to 2014 fed cattle profits were $5.5 billion. From 2015 to now fed cattle lost $5.1 billion
  • Domestic beef demand is expected to be 3-5% lower in 2016

For 2016 cattle prices are projected to average:

  • Fed $130-135/cwt
  • Feeders $160/cwt
  • Calves $195/cwt

Closing thoughts from CattleFax CEO Randy Blach:

  • “We’re going to get back to doing business. Everybody is going to be margin driven.”
  • “Packing margins should stay more positive. They’ve been more positive over the course of the last six months than what they’d typically be.”
  • “We’re in a time period when the markets went extremely volatile.”
  • “Our price level…with or without high-frequency trading we would still be at the same price levels. It’s just how we get there.”
  • “This is the second most volatile market we’ve had in history. It’s more volatile than what we had with BSE, a time when we were locked out of most of the international markets.”