No end seen in booming cattle market
Tim Petry expected strong cattle prices in 2014. "But I didn't expect they'd be this good. They've been phenomenal, in some cases almost unbelievable," said Petry, North Dakota State University Extension Service livestock marketing economist. "Th...
Tim Petry expected strong cattle prices in 2014.
"But I didn't expect they'd be this good. They've been phenomenal, in some cases almost unbelievable," said Petry, North Dakota State University Extension Service livestock marketing economist.
"These are really, really fun times," he said. "There's a lot of optimism out there."
He expects prices to remain good in 2015, possibly reaching new highs early in the year, but falling back somewhat by fall.
Petry spoke Oct. 30 in Grand Forks, N.D., at an agricultural outlook conference for ag lenders. The event, organized by the NDSU Extension Service, drew about 100 people, mainly ag lenders from northeast North Dakota. Two other NDSU ag outlook conferences were held earlier in Bismarck, N.D., and Minot, N.D., with the fourth and final conference scheduled for Nov. 3 in Fargo, N.D.
Beef supplies have remained tight, with demand holding up better than some in the cattle industry had feared, in part because the U.S. economy is strengthening. Exports of U.S. beef are growing, contributing further to strong demand.
"People (consumers) aren't cutting back and we have to ration what we have left (through higher beef prices)," Petry said.
That's sent beef prices to record highs, and those prices, along with plunging corn prices, have pushed up cattle producer profits.
Some area cattle producers will be making as much as $600 or $700 profit per calf this year, Petry said.
A few years ago, many producers were making less than $100 profit per calf, according to numbers from the North Dakota Farm Business Management program.
A key question is how soon and how much U.S. cattle producers will rebuild their herds. More cattle will increase beef supplies, which will work against cattle prices.
Rebuilding is beginning in the Upper Midwest, but ongoing drought in Texas and California limits the ability of beef producers there to increase their herds, Petry said.
There are indications that cattle numbers in Texas, the nation's leading cattle-producing state, will never return to what they once were, he said.
On the other hand, the cattle industry is increasingly efficient, with one animal producing more beef. So, the U.S. cattle herd can be smaller than it once was and still produce enough beef to meet demand, he said.
Even so, that efficiency gain has been more than offset by the decline in the number of cattle, Petry said.
Area ranchers, especially ones with plentiful feed, might consider holding on to their heifers, rather than selling them this fall.
"I think that's going to be a good strategy," he said. "There's going to be a really good demand for heifers next spring."
Petry's website, www.ag.ndsu.edu/ livestockeconomics, has cattle-feeding budgets and other information.