CattleFax Projections Include Improved
Weather Conditions and Record Price
News release by National Cattlemen's Beef Association
NASHVILLE, Tenn. (Feb. 5, 2014) — Cattlemen and women gathered today at the 2014 Cattle Industry Convention and NCBA Trade Show to hear CattleFax market analysts’ projections for the year ahead. Creighton University Professor Emeritus Art Douglas told the audience he expects improved moisture conditions in the majority of the United States, including improvements for drought-affected areas of the West Coast.
As precipitation returns back to more normal levels for the 2014 growing season, CattleFax predicts farmers in the United States should grow an adequate corn crop to build carryover supply. Improved corn supplies should assure lower input costs for the beef industry during the next 12-24 months, according to CattleFax Grain Market Analyst Mike Murphy.
“The lower input cost will have a direct correlation to improved feeder-cattle and calf values in 2014 and, with continued help from Mother Nature, we will be in better shape with regard to hay supply and prices moving forward,” Murphy said.
Global Market Specialist Brett Stuart said beef exports are expected to be near even in 2014 with record-high prices being the limiting factor. At the same time, expectations are for beef imports to be near even, despite the need for 90% trim due to the expected lower non-fed slaughter rates in the United States. The driving factor for stagnant imports is the growth of China demand for global beef, which will continue to divert beef from Australia into the China market and away from the U.S. market.
CattleFax Senior Analyst Kevin Good indicated the combination of improved moisture conditions resulting in lower input costs and record-high calf values should lead to beef cow herd expansion beginning in 2014.
Beef production in the United States will fall, with per-capita supply declining 4.5%. However, he said, pork and poultry supplies are expected to increase, leaving total meat supplies near even. CattleFax projects the Retail Beef Demand Index will improve by 1% due to continued modest economic growth.
“As we think about our consumers today, not only domestically but globally, they’re a lot more diverse than they have been in past,” Good said. “We’ve got different customers with different preferences and different pocketbooks.”
Because of the continued tighter feeder-cattle supply, Good said, the margin segments of the beef production system, both feedyards and packers, will struggle with excess capacity. Look for continued closure of both packing and feeding entities during the next 12-24 months.
Good said prices are expected to average $135 per hundredweight (cwt.) compared to $126 per cwt. during 2013, an increase of 7%. Yearling prices are expected to average $168 per cwt., an increase of 13% from the 2013 average of $146. Calf prices are expected to average $193 per cwt., up 13% from last year’s average of $168.
“After years of tightening supplies, the cow-calf sector will again remain in the driver’s seat during 2014,” Good said.
CattleFax CEO Randy Blach summarized the year ahead by saying almost all segments of the production chain will be profitable, although margin operators will continue to face challenges during the next few years.
Blach said he remains optimistic for the long-term cattle industry as profit incentives will result in a larger U.S. cattle herd during the next five years, creating business opportunities for those willing to adapt to a dynamic and changing business environment.
“You can start to see the globalization of the protein markets from the 1990s on,” Blach said. “We have the most efficient production system in the world, and we are the largest exporter of protein onto the global market.”
Editor’s Note: This article was originally presented as a news release by the NCBA. For the original release visit www.beefusa.org. For more information contact Chase Adams at 202-879-9125 or Shawna Newsome at 202-879-9138