Expansion kicks into gear, but solid ranch profits remain
Prices for your calves will be lower this year. While that’s unwelcome news, to be sure, there are plenty of positives to glean from a calf market just 15 months removed from record-high prices.
“We’re at cyclically lower cattle prices, probably at least through 2018, and maybe through 2019,” says Jim Robb, Livestock Marketing Information Center agricultural economist, Denver, Colo. But as the environment shifts away from what calf producers experienced during the post-drought period of escalating prices in recent years, Robb says producers can expect a return to “more normal” seasonal price patterns.
Cattle prices hit a peak in November 2014, with 400 lb. to 500 lb. steers topping $316 per cwt, according to USDA Market News, or more than $1,400 per head for newly-weaned calves. Remarkably, the November 2014 price was more than 50% higher than in 2013.
Robb, however, calls that market an anomaly, and he and other livestock economists believe cattle producers should build their expectations going forward on the fundamentals of supply and demand, which continue to show positive signs for beef.
Normal seasonal patterns, if they play out in 2016, would represent a welcome relief from the extreme volatility markets displayed this past fall. Newly-weaned calves sold for roughly 25% less in November 2015 than they had a year earlier, about $1,035 per head. Much of that decline was tied to heavy losses by cattle feeders.