Each year CattleFax shares outlooks for what could come in the near and even distant future during the Cattle Industry Convention. This year CattleFax is celebrating 50 years of analyzing cattle markets for beef producers and this past year was the second most profitable in history for the industry as a whole. For 2018, profitability won’t be as high for all stakeholders, but it is still expected to be a good year. The cow herd is starting to slow down on expansion and exports are going to continue playing a role in U.S. beef producers’ success.
Here are some of the facts and projections shared by CattleFax:
- U.S beef cow inventory increased 2.8 million head in four years, and an additional 200,000-400,000 head are expected to be added to the herd over the next few years.
- Total slaughter looks to rise 3.7% to 33.5 million head while carcass weights are expected to rise 10 lb. on average. Beef production is slated to rise 5% to 1.3 billion pounds.
- Cattle feeders are losing leverage with profitability share from beef cutout expected to reach 52.3%, down from a high seen in 2018 of 58.4%.
- From a long-term perspective beef demand looks to be very robust. Retail prices will likely only drop 1% in 2018.
- Exports are expected to account for 20% of fed cattle value at $343 per head in 2018.
- Corn acreage looks to rise 800,000 acres to 91 million acres. Corn is expected to yield 172 bushels per acre.
- In 1980, the U.S. was producing 47% of the world’s corn. Now it is about 35%.
For 2018 cattle prices are projected to average:
- Fed Cattle: $115/cwt ($100-130)
- 750 lb. Feeder Steer: $145/cwt ($135-160)
- 550 lb. Steer Calf: $158/cwt ($135-180)
- Utility Cow: $60/cwt ($50-70)
Closing thoughts from CattleFax CEO Randy Blach:
- “This year, 2018, will be the largest beef production year in our history. That will build as we go into the end of the decade.”
- “The markets have corrected back from the all-time highs we saw in 2014-15. With the demand growth there could a soft landing for profitability in the cow-calf sector.”
- “We think that it will be another profitable year for stocker producers. The market is going to give us an opportunity to contract and hedge.”
- “If we didn’t trade or export in 2018 you are talking about needing to consume 40 lb. more of protein.”
- “We think we are going to have more volatility. We have some challenges and trade is one.”
- “I would tell you that we will be a more risk managed business. The amount of money that it takes in our businesses is absolutely staggering.”
- “We have a higher percentage of cattle hedged than we have most years. We don't expect the basis to be as strong as it was last year but it will still be positive.”
- “The global market place wants what we have. It wants more of the pork. It wants more of the poultry. It wants more of the high quality beef we produce in this market. But we do have to have a level playing field. We have to have access (to export markets).”