Annual Cattle Prices Seen Much Higher

Average annual cattle prices in the Southern Plains are projected to rise exponentially this year and next before dipping slightly in 2016.

USDA projections compiled and graphed by the Livestock Marketing Information Center show a slight dip in annual prices last year for two classes of feeder cattle while fed cattle retained a slight upward bias.  Projections for this year’s annual price and for the 2015 value take the graph lines sharply higher.

The USDA projects annual feeder cattle prices this year at $242.00 per cwt for 500- to 600-pounders, a gain of $74.09, or 44.1%, from $167.91 in 2013 and $206.50 for 700- to 800-pound steers, up $58.05, or 39.1%, from $148.45 last year.  Fed cattle prices are projected at $154.00, a rise of $28.53, or 22.74%, from $125.47 last year.

Next year, the USDA sees the lighter-weight feeder steers at $272.50 in the Southern Plains, a gain of $30.50, or 12.6%, from this year.  The heavier-weight steers are projected at $231.50, up $25.00, or 12.1%, from $206.50 this year.  Fed steer prices are projected at $163.00, up $9.00, or 5.84%.

For 2016, the USDA crystal ball has the lighter steers at $271.50, for a decline of $1.00, or 0.37%.  The heavier feeder steers are seen at $227.50, down $4.00, or 1.73%.  USDA diviners expect fed steers in the Southern Plains to be about $164 in 2016, up $1.00, or 0.61%, from 2015.

Since records began in 1986, the low point in annual fed cattle, versus feeder cattle prices was in 1996 when feeder cattle dropped below the price of fed cattle.  In that year, Southern Plains 500- to 600-pound feeder cattle were listed at $60.58 per cwt and 700- to 800-pound steers were $60.85 both below the fed steer price of $64.77.

Since then, the graph shows a general rise in all three prices punctuated by a decline in feeder cattle prices from a peak in 2005 to a more recent low in 2007.  Since then, it’s been onward and upward except for that dip in 2013.

 

RISING PRICES HAMPER FEEDLOT SUCCESS

 

Rising feeder cattle and feed prices through 2013 have undercut the returns to cattle feeders through 2013, and rising replacement costs for the next two years could still present a challenge to their bottom lines.  However, a record corn harvest could make things a lot better for cattle feeders this crop year, especially if a rising US Dollar makes exports too expensive for foreign buyers.

Ever since a very profitable year in 2003, there has been only one year (2010) when cattle feeders consistently made money.  USDA figures show that in all other years, the average returns to cattle feeders feeding 725-pound steers in the Southern Plains were negative.

The worst was in 2012 when feeders lost $159.54 a head.  Last year was a little better, but they still lost $109.32 on each animal run through their operations.

 

COW/CALF RETURNS VERY POSITIVE

As might be expected with rising feeder cattle prices, annual returns to cow/calf producers have been stellar, especially over the last two years as the total herd shrunk to 63-year lows and imported feeder cattle became harder to find or harder to sell to the packers.

USDA data show that in 2013, cow/calf producers realized a return of $122.39 per cow, but this year, they are expected to see a return of $508.34 per cow, a jump of $385.95, or 315.34%.  Next year, returns may dip $13.27, or 2.61%, to $495.07 per cow.  But that’s still miles above the 2013 figure.