Average Cattle Prices Seen Falling In 2017

Average beef cattle prices are expected to continue falling in 2017, even though prices are moving higher for now and could show a first-quarter gain.

Fed cattle prices are rising currently in the cash and futures markets as beef demand continues to outstrip expectations.  But overall cattle prices for the year still are expected to decline as fed cattle supplies overtake beef and cattle demand.

Slaughter rates currently are pushing feedlot capacity to finish cattle, and slaughter weights are down as feedlot losses continue to mount.  In addition, lower feedlot placements in September and October, along with the lower slaughter weights and expectations that current beef demand will carry over into 2017 envisage strong prices.

The USDA’s World Outlook Board, in its latest World Agricultural Supply and Demand Estimates report, suggested cattle prices could remain strong through the first half of 2017 on continued strong beef demand.

 

FED CATTLE OUTLOOK

 

Data showed 2014 was the peak in Southern Plains annual fed cattle prices at $154.33 per cwt.  2015 annual prices were placed at $147.61, down $6.72, or 4.35%.

Last year, the LMIC estimated annual fed cattle prices to be around $121 per cwt, down $26.61, or 18.0%, from 2015’s $147.61.

For 2017, fed cattle prices could drop even more to around $111, the LMIC said.  This would be a decline of $10.00, or 8.26%, from the 2016 estimated annual average of $121.00.

By 2018, fed cattle prices in the Southern Plains could drop to $109 per cwt on a live basis, the LMIC said.

 

FEEDER CATTLE OUTLOOK

 

The outlook for feeder steers in the Southern Plains travels much the same route as the fed cattle except that 2015 proved to be the high for fed steers, and 2016 appears to be the peak year for feeders.

The estimated average annual price for 700- to 800-pound feeder steers in 2016 was estimated at $145.50 per cwt, up about $61.82, or 29.8%, from the 2015 average of $207.32, AMS data showed.

However, the estimated 2017 average price of $130 per cwt is down $15.50, or 10.7%, from 2016’s estimated average with the 2018 estimate down $1.00, or 0.77%, from the 2017 average and down $16.50, or 11.3%, from the 2016 estimate.

As feeder cattle prices decline, so does the outlook for per/cow returns to their owners.  From its annual peak of $530.22 in 2014, to the 2017 estimate of a minus $29.50, the estimated return to cow/calf producers will fall $559.72.

The situation for cow/calf producers in 2017 doesn’t improve much in 2018 with an average per-cow return estimated at a minus $28.72.

 

CASH CATTLE TRADE HIGHER

 

Average auction prices Wednesday were $2.71 per cwt higher at $115.39, versus $112.68 a week earlier.  Cash cattle then traded in Nebraska at $115 to $116.50 on a live basis followed by trades elsewhere up to $118 on Thursday and Friday.  Dressed-basis trades ranged from $188 to $190.

That compares with last week’s full range of $113.25 to $116 live and $180 dressed.

The USDA’s choice cutout Friday was $0.14 per cwt lower at $203.33, while select was off $1.05 at $192.84.  The choice/select spread widened to $10.49 from $9.58 with 48 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Thursday was $133.17 per cwt, up $0.13.  This compares with Friday’s Jan settlement of $130.45, down $1.47.