November 20, 2013
US beef prices to stay high in 2014
Limited cattle supplies in the USis expected tokeep cattle prices high in 2014.
Factors, likehigh domestic beef demand and improving global opportunities, will also help toincreasethe potential fornear record-high profitability,said Scott Brown, a beef economist from theUniversity of Missouri.
Headded thatthe forecast for the cattle market over the next two years compares to the "golden era" of beef profits in 2004. Brown presented his outlook to producers at the annual Missouri Forage and Grassland Conference at Port Arrowhead, Lake Ozark, earlier this month.
In addition to high cattle prices and low feed costs, demand in the US and global markets is improving.
Brown added, "So not only do we expect domestic demand for beef to be better as we look ahead to 2014, but the ability to move product into places like Japan, South Korea and China does nothing but continue to help us on the price side."
His forecasthas a favourable outlookfor the industry, especially cow-calf producers, as it showed a sharp rise in live-cattle futures prices since 2010, from US$80 per hundred to US$135. Cattle supplies falling to a 61-year low has moved cow-calf returns from -US$25 per cow in 2009 to +US$25 in 2012. Brownsaid thatthose returns could skyrocket to US$300 per cow next year based on estimates from the Livestock Market Information Centre.
Beef prices continue to improve and are expected to move an additional 2% or 3% higher next year. However,the trend could change if consumers turn to pork and poultry as lesscostly meat options. A rebounding economy and more disposable income will help keep beef on dinner tables across the country.
The outlook for 2014 and beyond is much more positive than the last four or five years, but unexpected drought could affect profitability.
Brown added thatthe expected profits in the cattle industry could benefit rural economies.