The 2015 Range Beef Cow Symposium attracted over 750 ranchers and industry representatives to northern Colorado this week for a diverse lineup of educational presentations and discussions. The program kicked off with the beef-cattle market outlook from economist Jim Robb, director of the Livestock Marketing Information Center.
Rob says that while market analysts have expected some decline in cattle prices, the drastic 20 percent plunge in the fed-cattle market this fall caught the industry off guard. The correction quickly spread to other classes of cattle, but in spite of those declines, Robb says this year’s market remains the second-highest in history, following the record-high prices in 2014. And while Robb believes we have seen the market lows for this year, he does not expect a strong recovery in the near term. U.S. cattle producers have entered a strong expansion phase, and with global economies struggling and the U.S. dollar remaining strong, lagging exports will leave larger supplies of beef in domestic markets.
The U.S. economy, Robb says, is enjoying slow but sustainable growth, while national economies around much the world remain flat or declining. Domestic retail beef demand is strong and has increased over the last few years, although per-capita consumption is lower due to tight supplies.
Our beef exports have declined since the summer of 2015, largely due to lagging international economies and the strong U.S. dollar driving up the price of American beef in foreign markets. Robb expects exports to remain flat through 2016 and to gain momentum in 2017. Our beef imports jumped significantly in 2015, due to short domestic supplies, particularly of lean beef for grinding. Most of those imports came from Australia, where producers have been liquidating herds in response to severe drought. Resulting tight supplies of Australian cattle likely will mean declines in beef imports over the next two years.
Competing meats also have contributed to downward pressure on beef prices. U.S. poultry production has increased this year, while exports have declined due to outbreaks of avian influenza. Domestic pork production also increased significantly this year, resulting in lower pork prices. Robb expects slower increases in U.S. pork and poultry production over the next two years.
U.S. cow herds are expanding, but remain below 2013 levels and are likely to continue expanding through 2016. Average returns to cow-calf producers, at around $350 per cow this year, have dropped from record levels around $500 per cow in 2014 but remain historically high. Cattle feeders meanwhile are experiencing record losses averaging around $300 per head. Slaughter weights have continued to rise, with dressed weights currently averaging around 930 pounds.
Robb expects prices for all classes of cattle to follow more seasonal patterns over the next two years, while remaining lower than those of 2014. He advises cow-calf producers to price calves realistically, set bids early when possible and invest 2015 profits wisely. He also notes the cattle-feeing industry has changed and will continue to evolve. Cattle feeders need to limit their risk when investing in calves and pay accordingly. Cow-calf producers should invest in efforts to add value and know the potential of their calves beyond the ranch gate.
The Range Beef Cow Symposium takes place every two years, with hosting duties rotated between Colorado State University, South Dakota State University, University of Nebraska and University of Wyoming. Colorado State University hosted this year’s symposium, and the University of Wyoming will host the event in 2017.