Despite recent and current positive cattle feeding margins, increases in feeder cattle prices are offsetting declines in corn prices, signaling continuation of positive margins. Despite record retail beef prices, meatpackers are caught between high fed cattle prices and cutout values too low to generate positive packer margins.

U.S. cattle imports are up 13 percent this year as high U.S. cattle prices continue to draw animals across the border. U.S. beef imports continue to grow and were up 46 percent in August from a year earlier. Demand for U.S. beef exports slowed somewhat this summer but remain strong to Hong Kong and Mexico, both showing strong gains from last year.

The September Quarterly Hogs and Pigs report showed continued effects of PEDv (Porcine Epidemic Diarrhea) in lower inventories of market hogs. At the same time, the report indicated nascent signs of recovery and expansion. Fourth-quarter hog prices are expected to average $72-$74 per cwt, almost 20 percent above a year ago. Prices next year are expected to average $63-$68 per cwt, more than 15 percent below 2014 but almost 3 percent greater than the average in 2013. August pork exports were more than 13 percent lower than a year ago, due largely to reduced shipments to several important Asian markets.

Source: USDA Livestock, Dairy, and Poultry Outlook