Optimistic outlook for the beef industry

CattleFax predicts strong prices, normal weather conditions for the Corn Belt in 2015

 

The perfect storm experienced by the cattle and beef market last year is in the review mirror, said CattleFax chief executive officer Randy Blach during the CattleFax Outlook Session at the 2015 Cattle Industry Convention.

“We put the top in the market in the past year and the signal for expansion has been transmitted,” he said. “We will begin to see some modesty expansion in herd numbers now and that will cause prices to trend lower in the years ahead than what we saw in 2014.”

Blach explained that growing supplies of cattle and beef over the next several years will rebalance the normal price and margin environment among industry segments.

Still, market analysts projected strong prices for 2015 were good news for beef producers, especially for cow-calf operations.

Once again this year, cow-calf producers are expected to be the driving force for the beef industry with profit returns at historically high levels.   Calf prices are expected to trend $200 to $220/cwt. with the highest prices occurring in the first half of the year.  The strong demand for bred heifers will keep prices higher. CattleFax estimated the cost of bred heifers will average $2500/head in 2015.

Looking at the CattleFax forecasts, fed cattle prices are anticipated to average $157/cwt. with prices estimated to trade range $140-$170 in the year ahead.   While early year highs for 550 pound steers will range from near $285/cwt. to lows near $235 cwt.

Moreover, all fresh retail beef prices are forecasted to average $5.90/lb. in 2015, up 5.4% from last year.  Boxed beef cutouts will follow the fed cattle market and anticipated to average $242/cwt. this year, up 2.1%.

The animal protein sector has already transitioned from the tight supplies in 2014 as pork and poultry production for this year is projected to climb 4-6% and beef supplies will closer to 1%.

Art Douglas, Ph.D., Professor Emeritus at Creighton University, presented the annual weather forecast which projects moisture conditions in the United States through the summer.

“El Nino conditions have again built across the Pacific and this will fuel a split jet stream pattern into the Southwestern United States. Moisture will gradually increase in February from southern California to the southern High Plains,” said Douglas. “Snow-packs in the northern Rockies are expected to remain well below normal at 50-70 percent levels while the southern Rockies should gradually build their snowpack through March. As the jet heads east it will pick up Gulf moisture and lead to above normal rainfall throughout the southeast.”

“The pesky ridge in the West will gradually weaken during February and by the spring this will allow moisture to increase in the Pacific Northwest,” he explained. A strong Great Lakes trough is forecast to keep a broad portion of the United States colder than normal through the spring and early summer.”

Douglas said this pattern should lead to delayed planting in the Corn Belt with possible threat of late frosts into the late spring.

“The cool temperatures are likely to persist into early summer and this will slow crop progress but be ideal for corn pollination in July. The silver lining in the forecast is that the Midwest should turn warmer by August and September and this will help speed up crop maturation,” he said.

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