Each year CattleFax shares outlooks for what could come in the near and even distant future during the Cattle Industry Convention. For 2017, the success of the beef industry might hinge on a lack of packing capacity to meet the increasing amount of fed cattle. Pork and poultry production continue to grow domestically, so it will be vital to have more trade opportunities for beef going forward.
Here are some of the facts and projections shared by CattleFax:
- The cow herd has expanded approximately 2.1 million head since 2015. Much of this growth has been restocking in the Central Plains where the cow herd was culled heavily from drought.
- Cow herd expansion looks like it will continue with an estimated 1.45 million added over the next two years.
- An additional 1.5 million cattle were slaughtered in 2016 compared to 2015. Slaughter should be up 850,000 in 2017 and another 530,000 head in 2018.
- Carcass weights look like they should pull back about 2 lb. thanks to the added fed cattle. Historically, carcass weights average a 5 lb. increase year-over-year.
- Beef production is projected to reach 26.3 billion lb. in 2017, a 3.9% rise in output.
- Overall protein production from red meat and poultry is up 5.5 billion lb. the past two years. That’s a jump of more than 6%.
- Per capita meet consumption continues to trend up from 2014’s 22 year low point. Last year American’s ate 212.4 lb. of meat. Next year it is expected to rise another 3.7 lb. followed by a 2.2 lb. increase in 2018.
- Quality grades are on reaching all-time highs. In 2016, 75.7% of cattle graded Prime or Choice. Ten years ago that number was just 54.3%.
- Trade is important for beef profitability with exports accounting for $333 in per head value for 2015. USDA estimates 2016 will finish at $304 in value and projects $320 for per head trade in 2017.
- Beef exports are expected to go up 6%, while imports should drop 7%. By 2018 the U.S. should be a net beef exporter.
For 2017 cattle prices are projected to average:
- Fed Cattle $110/cwt ($98-124)
- 750-Feeder Steer $130/cwt ($120-140)
- 550-Steer Calf $150/cwt ($135-165)
- Utility Cow $65/cwt ($55-75)
Closing thoughts from CattleFax CEO Randy Blach:
- “For those in the stocker or backgrounding business you have to see profitability for the cattle feeder if you are going to see stability in your markets.”
- “These markets are so much more liquid than what they’ve been in the past.”
- “Price discovery is not free. We are going to have to make some investments in price discovery in our industry.”
- “Commodity market prices have declined 45-60% from the early decade highs.” Blach had a more in-depth discussion on this topic at the Kansas Livestock Association Convention.
- “Until we have more plants or access to more workers that is going to be a limitation. That is a real bottleneck.”
- “The way the markets move with momentum is something to keep in mind.”
- “There will be some leaner years as we get to the end of this decade.”