Spring conditions are helping shape a strong cattle market in 2016, according to a Texas A&M AgriLife Extension Service economist based in College Station, Texas.
David Anderson, an AgriLife Extension livestock economist, said conditions around most of the state have been good for cattle producers. Aside from areas where there has been flooding, Anderson said 2016 is shaping up to be a good year.
Good conditions won’t mean a return to record prices producers received in 2014 and 2015, he said. But prices will likely remain high, historically speaking.
Prices for 500-600 pound calves are expected to average $180 per hundredweight for the year. Compared to 2009, the market’s last real valley, 550–pound steers averaged about $101 per hundredweight for the year.
Prices began climbing in mid-2009 as producers reduced herds and drought conditions in 2011 forced even more herd reduction, Anderson said. Sharply falling feed costs in 2013 and 2014 only accelerated rising calf prices.
Anderson said the El Niño weather pattern over the past couple years likely contributed to drought ending rains, creating conditions which allowed producers to expand herds. But expansion is driving prices down now, he said.
He expects the long-term trend to continue downward but doesn’t expect dramatic price fluctuations for the near future. Prices for 500-600 pound calves remain strong because they are still hard to come by, he said.
A La Niña weather pattern is expected to develop later this year, but Anderson said any drastic change over the summer could move the market one way or the other. However, he expects 2016 to be a good overall year for cattle producers.
Spring is historically a good season for beef sales, Anderson said. People are cooking out and grilling, so “middle meats,” such as ribeyes and strips, are increasingly in demand. And prices are rising accordingly. Wholesale ribeye prices climbed more than $1 a pound between February and mid-March, but overall retail beef prices have remained relatively flat this year after a steady decline since May 2015.
“Selling a 500-pound calf for around $850 to $900 isn’t bad,” he said. “Prices are going to remain historically high but just not at the record numbers we saw a year ago.”