More Analysts Predict Struggling Cattle, Beef In 2015

A growing number of cattle market analysts are projecting lower beef 2015 beef production along with lower average prices as price relationships return to more normal levels.

The apparent contradiction was explained by Allendale Inc., Chief Analyst Rich Nelson at the company’s annual Livestock Outlook meeting who said the market may remain under pressure into 2017.

Feeder cattle demand was unusually large last year with a 54% price increase, Nelson said.  Such increases are so unusual as to be unpredictable.

Last year, five-weight calves averaged about $290 per cwt, but in typical years, those same steers would have been $215 to $225 a pound.

 

CONSUMER MEAT DEMAND CITED

 

Strong consumer demand for red meat was behind the unprecedented rise in beef and pork prices in 2014, he said.  Shoppers paid up for meat as the economy began to grow, sending retail beef prices up as much as 20%.

The growth of the “Paleolithic diet,” which advocates higher consumption of red meats at the expense of dairy products, grains, legumes, processed oils and refined sugar, also was cited for boosting demand for meat.

Live cattle demand was up 13% last year, the largest single-year increase ever.

At the same time, beef production was declining as more heifers were retained for breeding rather than being sent to slaughter.  More cows also were not culled, being kept for breeding to yield another calf or two.

In response to lower corn prices and rising feeder cattle prices, feedlots fed cattle to heavier weights, but this did not deflect completely the lower slaughter rate.

The cattle industry is expanding its herd size, but consumers won’t notice any difference until mid-2017.  Nelson said 2015 beef production would remain depressed.  He predicted cattle demand this year would decline about 10%, giving up much of 2014’s unusual gains.

 

PORK PRODUCTION SEEN ABOVE BEEF

 

In addition to lower beef production and the fundamental price support that goes along with it, US pork production is expected to surpass beef for the first time since 1952, the USDA said.

Production this year is expected to climb to a record 23.908 billion pounds through a combination of more and heavier hogs going to market, the USDA said.  In contrast, beef production was forecast to decline 1.7% to 23.901 billion pounds, and chicken production was seen rising to a record-high 39.206 billion pounds.

The pork industry is getting ahead of the Porcine Epidemic Diarrhea virus that decimated individual herds and killed millions of baby pigs.  Producers also are taking advantage of lower corn prices and higher butcher hog prices to feed to heavier weights, producing more pork.

 

CASH CATTLE APPEAR STEADY

 

Cash cattle prices this week appear to be holding steady with last week.  A few head were reported sold to packer buyers Wednesday at $160 per cwt on a live basis, compared with a Plains-states range last week of $159 to $160.50.

Bids in Texas Wednesday were reported at $158 to $160 per cwt with asking prices of $162 to $163.  Asking prices in Nebraska’s dressed market were reported at about $260.

Wholesale beef prices Wednesday were mixed with the USDA’s choice cutout down $0.36 per cwt at $242.75 and the select cutout up $0.44 at $235.58.  Volume was good with 141 fabricated loads being sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Tuesday was $212.38 per cwt, down $0.49, compared with the Mar contract’s settlement Wednesday of $196.72, down $2.77.