RANCHING Business
Beef Supply Down, Prices Up A little rain would help everything
B
EEF PRODUCERS AT THE 2013 CATTLE INDUSTRY CONVEN- tion heard Creighton University Professor Emeri- tus Art Douglas say there is a chance some
regions of the United States will see a return to more normal precipitation patterns during the upcoming spring and summer growing season. That was welcome news to participants, many of
whom have been enduring an ongoing, multi-year drought that has affected more than 70 percent of cattle country. If precipitation returns to near-normal levels for
the 2013 growing season, CattleFax predicts farmers in the U.S. will plant a record number of acres in corn and soybeans. Speaking at the convention, CattleFax Grain Market Analyst Chad Spearman said that would lead to lower feed grain prices this year. “If we see anything close to
trend line yields, we’ll see relief on the supply side and the result will be price relief, particularly in the second half of 2013,” said Spearman, who added the addi- tional moisture will help mitigate hay prices after harvest begins this summer.
Although input costs may provide relief, Mike Mur-
phy, CattleFax analyst, provided a note of caution, saying a possible economic slowdown could put pres- sure on beef prices and demand among consumers. He projected net income in the U.S. would be fl at, with incomes struggling to keep pace with infl ation. However, he predicted beef exports would continue to provide support for prices. “We expect to see an increase in exports, due in
large part to an increase in shipments to Japan since that market recently opened to beef from cattle under 30 months of age,” said Murphy. “Imports will also be up substantially as well, due to tighter supplies in the U.S. at a time when we have strong demand for 90 percent lean trim.” Kevin Good, CattleFax senior analyst, predicted beef production in the U.S. will fall, with per-capita supply
34 The Cattleman April 2013
declining 2.2 percent. However, he said the decrease will be par- tially offset by increasing carcass weights. CattleFax projects the Wholesale Beef Demand Index will decline by 1 percent, due to a 1 percent decline in real income of consumers. Good said he expects that there
will be a shift in leverage with the loss of packing ca- pacity in the U.S. after the closure of a Southern Plains packing plant earlier this year. “As a result of that decline in capacity, feedlots will
get a smaller percentage of the wholesale value of beef,” said Good. He added that CattleFax is projecting aver- age prices will be higher for all classes of cattle during 2013 compared to the prior year. Prices are expected to average $126 compared to $123 during 2012, an increase of 2.5 percent. Yearling prices are ex- pected to average $155, an increase of 5 percent from the 2012 aver- age of $147. According to Good, calf prices will average $175, up 5 percent from last year’s average of $167. “The cow-calf sector will re-
main in the driver’s seat during 2013, particularly if they have feed,” said Good. CattleFax CEO Randy Blach summarized the year
ahead by saying it will be a diffi cult year for margin operators in the cattle business. He emphasized the importance of risk management due to continued volatility and rising capital requirements. Packer margins, though, should see some improve-
ment as the result of the decline in capacity, a trend that he expects to continue. “Don’t be surprised if we see the loss of another 1
or 2 plants before we’re done with the consolidation phase,” said Blach. Likewise, he said the industry can expect cattle feeding capacity to continue its decline due to the current market situation.
thecattlemanmagazine.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102