Based on expectations for an increase in cattle numbers, most economists expect modestly lower cattle prices this year. Other than the fundamentals of supply and demand, there are three factors that could influence livestock markets in 2017.
The first is meat demand and consumer preferences, which is a continuously shifting target. Recent trends suggest consumers are shifting back toward more flavor, which means they are not avoiding fat as much as previously. That trend is supported by some recent dietary research that suggests a moderate amount of fat is okay.
The Economy and personal income is the second factor to watch in 2017 as they directly impact consumer meat demand. Recent consumer incomes are rising at a faster pace with lower unemployment. Retail prices have slowly moved lower and that will encourage consumer demand.
A third factor will be International Trade and the value of the U.S. dollar. America’s livestock industries are dependent on export markets - 20% of U.S. pork, 16% of US chicken and 10% of all beef currently is exported. Many of our foreign customers are experiencing rising incomes among their population, which means they are likely to increase the protein in their diets. A limiting factor for expanded exports of U.S. livestock will be the value of the U.S. dollar. A strong dollar is generally negative for exports and analysts expect the dollar to remain strong against foreign currencies in the near future.