Recent price shock in the market and insights about the turbulence ahead were explained today to more than 2,000 beef producers at the CattleFax Outlook Session held during the 2016 Cattle Industry Convention and NCBA Trade Show.
Many business have struggled with the downward spiral in price from record high cattle prices, but CattleFax CEO Randy Blach said the market correction has mostly occurred.
“We are coming off of historic peaks in the cattle market, created by unique conditions in the global beef and protein markets,” said Blach. “Dynamics, specifically global beef supply, led to a large correction in price. That big market downward swing is nearly over now. However, the cycle shows prices continuing to trend lower in 2016, 2017 and 2018.”
Analysts predicted the cattle feeder will lose about $200 per head, stocker operators with tight margins, and cow/calf with profitable margins. The team of economists expect fed cattle prices averaging $130 to $145 over the next year.
“The cow/calf margins will still be profitable, but substantially lower than in the past two years,” said Kevin Good, Senior Analyst and Fed Cattle Market Specialist, CattleFax. “We predict the cattle feeder will have tight margins for the year overall with potential for profit mid-year.”
The two-year El Nino weather pattern replenished moisture conditions across the country, specifically the West coast, which brought the region some relief in 2015.
“As we head into 2016, a split jet stream pattern will favor above-normal precipitation from California to the Southern Plains and the Southeast through March,” said Douglas. “In the Corn Belt, spring will be wetter-than-normal which will be accompanied by slower spring warming. Delays in fieldwork and planting dates are likely to result.”
Analysts predicted a $66 drop per head from 2014 values in the next year. The strong U.S. dollar, slowdown in global market and challenges with market access assisted in the decrease in export potential. Russia and China are still the biggest opportunities for U.S. beef, but trade restrictions will continue to limit potential in the year ahead.
Photos from the Convention: 2016 2016 Cattle Industry Convention Photo Album