Beef producers should brace for lower prices in the near term as feedlot marketing of cattle slowed during August through September.
Stan Bevers, a Texas A&M AgriLife Extension Service economist in Vernon, gave an overview of the cattle market heading into 2016 at a Rebuilding the Beef Herd program at Camp Cooley Ranch in Franklin.
Bevers said feedlot operators paid higher prices for feeders going into the feedlots earlier in the year and, due to falling live cattle prices, are choosing to put more gain on them rather than buying new feeder cattle with negative breakevens.
“Cattle are staying longer in the feedlot,” Bevers said. “Typically, they stay 120 days. Now it’s 180 days and in some cases, 250 days. The cost of gain is relatively cheap. Feeder prices were well over $2 back in March, so feedlots are looking to feed them a little longer, get them bigger and avoid taking a $200 a head loss.”
On average, slaughter weights have been 1,360 pounds, but Bevers said there are reports of slaughter weights in the 1,700-pound range.
Dr. Ron Gill, Texas A&M AgriLife Extension Service beef cattle specialist and associate department head for animal science at Texas A&M University, discusses chute side manners during the Rebuilding the Beef Herd program at Camp Cooley Ranch in Franklin. (Texas A&M AgriLife Extension photo by Blair Fannin)
“As a result, beef tonnage is going up with these heavier weights,” Bevers said. “We’ve got about two more weeks of these big cattle. In the long term, we will likely see things ratcheting lower.”
The calf market has reacted with lower prices. Bevers said 450-pound calves that were selling for $1,250 earlier this year are now bringing $1,000.
Bevers said fed cattle could get back to the $1.45 a pound range, but not eclipse $1.60.
“What drives these prices is how much beef production we have in this country along with how much the consumer is willing to purchase,” he said.
Dr. Ron Gill, Texas A&M AgriLife Extension Service beef cattle specialist and associate department head for animal science at Texas A&M University, demonstrates how to disassemble the barrel of a pistol grip syringe during his chute-side manners demonstration. (Texas A&M AgriLife Extension Service photo by Blair Fannin)
Recent U.S. Department of Agriculture reports suggest cattle herd rebuilding is underway. By 2016, Bevers said it is projected there will be approximately 31 million head of beef cows.
“Overall, you should prepare for lower prices,” Bevers said.
Boxed beef prices that were $265 in May are now $215 as a result of heavier weight fed cattle hitting the market and increasing tonnage, he said.
Dr. Rick Machen, Texas A&M AgriLife Extension Service livestock specialist, Uvalde, discusses how to use hay sampling with a probe to determine crude protein percentages. (Texas A&M AgriLife Extension Service photo by Blair Fannin)
“It’s not just an increase in the numbers of cattle being slaughtered, but also because of the heavier weights,” he said.
Low gasoline prices have helped consumers continue to make beef purchases despite record-high retail prices, he said. Six months ago, ground beef prices were $5.50-$6 a pound.
“Energy prices have helped prevent consumers from turning away from beef,” Bevers said. “Cheaper gasoline has really helped with this high-priced beef environment.”