The 2015 wildly volatile cattle market appears to be over, Cattle-Fax analysts said Thursday, but feedlots likely still will come out losers in 2016.
Speaking at the annual National Cattlemen’s Beef Association’s annual convention in San Diego, Calif., the analysts said they expected feedlots to lose about $200 a head this year as other segments of the industry maybe break even or continue to be profitable.
They predicted those who pasture calves prior to being sent to the feedlots would just about break even. Cow/calf producers would remain profitable but at a lower level than last year.
FED CATTLE
The team of economists expected fed cattle prices to average $130 to $145 per cwt over the year. This compares favorably with the USDA’s estimate of $137, down $11, or 7.43%, from the 2015 estimate of $148.
For 2017, the USDA expected fed cattle prices to average about $134 per cwt, down $3, or 2.19%, from the 2016 estimate. All fed cattle price estimates were down from the USDA’s official annual peak of $154.33, which came in 2014.
In fact, the USDA’s predicted annual average cattle prices through 2017 point to lower prices for all classes of cattle. This is why cow/calf producers are likely to see their 2016 returns decline.
Cattle-Fax’s graphs of its price predictions are proprietary, but a graph of USDA numbers shows a similar pattern of expected lower prices this year and next.
FEEDER CATTLE
“Cow/calf margins will still be profitable but substantially lower than in the past two years,” said Kevin Good, senior analyst and fed cattle market specialist for Cattle-Fax.
The USDA graph of key annual cattle prices in the Southern Plains shows its expectations for steep declines this year and next. For 500-to 600-pound calves, the analysts are predicting average prices will drop $54.50 per cwt, or 21.5%, this year to $199.50 from an estimated peak of $254 last year.
USDA annual prediction for 700- to 800-pound feeder steers would go to $166 per cwt from 2015’s estimated $209.50, a drop of $43.50, or 20.8%.
CASH CATTLE QUIET
Cash markets Thursday remained undeveloped with bids posted at $132 per cwt on a live basis with asking prices at $138 to $140. Bids in Nebraska’s dressed market remain scarce with asking prices at $215.
Cattle trade last week was mostly $133 to $134 per cwt live and $202 dressed.
The USDA reported mixed wholesale beef prices Thursday, with choice down $1.21 per cwt at $220.12, and select up $0.41 at $215.43. The choice/select spread narrowed to $4.69 from $6.31 Wednesday, and there were 133 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Wednesday was $160.96 per cwt, up $2.06. This compares with the Jan expiration price Thursday of $161.30, up $0.37, and Mar’s settlement of $159.42, down $0.50.