COL Improvement ahead in beef market
Cattle numbers aren't there
By Janet Kubat Willette
The beef market should improve, but issues with pork and poultry may keep prices down.
Strong beef marketings occurred last month and feedlot placement is down as ranchers in the western Corn Belt, Nebraska and Kansas sell off cattle because of the drought. Calf numbers are also down.
Combined, these factors, offset with increasing weights, should result in 2 percent to 4 percent lower production, said Brian Buhr, associate professor in agricultural economics at the University of Minnesota.
"We're at the longest beef cycle we'd had," said Iowa State University Extension livestock economist John Lawrence. "Given the drought conditions in the west, several of us don't believe we're see an expansion come the January numbers."
But trade issues with poultry and high pork production are keeping prices low. The weak economy has also hurt higher-end restaurants where beef is primarily consumed, slowing demand. Poultry products tend to move more at fast-food restaurants.
A deal was reached last week between the United States and Russia that should restart the movement of U.S. poultry into leading importer Russia. The news sent meat company shares higher, but it's impact on livestock prices is yet to be seen.
Beef prices in particular have been dragged down by higher cattle weights and large pork supplies, Lawrence said.
"There's lots of competition at the retail counter," Lawrence said.
All livestock producers need to watch grain prices and stop and re-evaluate their marketing decisions, he said. Corn prices are significantly higher than the past year and producers must consider if it's still appropriate to put extra weight on animals before marketing. The last few pounds are the most expensive to put on, but when corn is cheap it is still profitable to feed it.
Now, with rising grain prices, producers need to determine if it makes financial sense to feed the corn to cattle or to market the corn, Buhr said.
In southwest Minnesota and northwest Iowa, it is probably still more profitable to feed cattle than market the grain, Buhr said. Those two areas have the distinction of receiving the lowest cash prices in the nation for corn. There's a lot of corn available and few low-cost shipping options.