Webinar Outlines 2016 Calf Market Expectations

Cattle Fax Market Outlook 2014CENTENNIAL, CO — Cow-calf margins will shrink as the U.S. beef cowherd expands, but producers can ensure future profitability by adjusting business plans for the supply increase. An upcoming free CattleFax webinar will address a 2016 outlook for the cow-calf segment and entire beef sector, while exploring continued cowherd expansion.

The CattleFax Trends+ Cow-Calf Webinar will be at 5:30 p.m. MT, Jan. 20, 2016. To participate in the webinar and access program details, producers and industry leaders simply need to register online at www.cattlefax.com/meetings.aspx

One of the most aggressive U.S. beef cowherd expansions in the last four decades will increase beef supplies and pressure cow-calf profitability over the next several years. As profits narrow during that time, well-informed producers can maintain healthy margins by adjusting production, marketing and risk management plans with increasing supplies in mind.

  • CattleFax analysts will discuss a variety of topics in the one-hour session, including:
  • Cattle and feedstuff market projections for the next 12 to 18 months
  • Supply and margin expectations based on U.S. beef cowherd expansion estimates
  • Expected returns of beef cows over their productive life and potential opportunities.

The Trends+ webinar series informs cattle producers about current market conditions and provides providing decision-friendly advice regarding management decisions. The analysis and strategies shared through the webinar series has reached more than 2,500 producers, and sponsorship from Elanco Animal Health is making the seminar free for all attendees.

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CattleFax is a member-owned organization that serves producers in all segments of the cattle and beef business. CattleFax is the global leader in beef industry research, analysis and information. Since 1968, the organization’s exclusive industry database has set the standard for market information and analysis. Visit www.CattleFax.com to learn more and become a member.

Senate Reauthorizes Mandatory Livestock Price Reporting Without Critical Provision

WASHINGTON (Sept. 22, 2015) – The National Cattlemen’s Beef Association appreciates the efforts of the Senate in reauthorizing Mandatory Livestock Price Reporting through 2020. NCBA President, Philip Ellis, a Wyoming cattle producer, said this information provides producers greater transparency in market conditions.

“Transparency is essential to the functioning of our livestock markets, and our ability as producers to make decisions critical to our profitability,” said Ellis. “We appreciate the Senate’s reauthorization of this provision before it expired at the end of the month. Unfortunately, due to the actions of Senator Stabenow, not only does this legislation lack the status of an essential service, the bill differs substantially from the House version; subjecting producers to further delay and uncertainty.”

Mandatory Price Reporting requires meat packers to report to USDA the prices they pay for cattle, hogs and sheep purchased from farmers and ranchers for slaughter, as well as the prices they receive for the sale of wholesale beef, pork and lamb. Mandatory Price Reporting also requires USDA to issue daily, weekly and monthly livestock and meat market reports.

“For American’s cattlemen and women, market transparency is not a luxury,” said Ellis. “Cattle markets are complex and ever-changing, and cattle producers like myself rely on the information provided by price reporting to make informed decisions. The actions of Senator Stabenow have ensured that cattle producers will not have access to this critical market information in the event of a government shutdown.”

In contrast to the House version, the Senate’s Mandatory Price Reporting legislation does not make the program an essential government service, rendering the program vulnerable to future government shutdowns. Due to these differences, the legislation now must be conferenced with the House, and signed by the President prior to expiration on Sept. 30, 2015.

Webinar for Producers with Value-Added Calves

calving season #calfwatch14Seasoned cow-calf producers recognize the calf market’s record-high prices are likely to decline as cowherd expansion brings additional supplies. Producers can maintain higher profitability by recognizing this shift and quickly adjusting management and marketing strategies.

CattleFax will discuss these topics during its next Trends+ Cow-Calf Webinar at 5:30 p.m. MT, Jun. 10, 2015. To participate in the webinar and access program details, producers and industry leaders simply need to register online.

The one-hour session will include a variety of relevant topics for the cow-calf audience:

  • A second half 2015 price outlook for the cattle and feedstuff markets,
  • Expectations for 2015 value-added premiums in the calf market, and
  • Considerations for estimating returns on value-added management practices.

The Trends+ webinar is designed to inform cattle producers about current market realities and provide producers with decision-friendly information to assist in making intelligent marketing decisions. More than 2,000 producers have benefitted from the analysis and strategies shared through the webinar series since fall 2013.

Elanco Animal Health is sponsoring the webinar – making it free for all cattle and beef producers to participate.

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CattleFax is a member-owned organization that serves producers in all segments of the cattle and beef business. CattleFax is the global leader in beef industry research, analysis and information. Since 1968, the organization’s exclusive industry database has set the standard for market information and analysis. Visit www.CattleFax.com to learn more and become a member.

MidYear Meeting 2015

Stockgrowers MidYear to Feature Short and Long Term Cattle Price Outlook

What will the markets do next? Aside from keeping an eye on the weather forecast, this seems to be the frequent question among ranchers in today’s cattle business. With recent record-high calf prices, we’re not always sure what to expect next, only guessing whether the markets will fall or continue climbing.

At Stockgrowers 2015 MidYear meeting, attendees will be provided with some insight and historical context to today’s cattle market prices and what can be expected in the months ahead. Dr. Gary Brester, Professor in the Department of Ag Economics at Montana State University, will highlight the Opening General Session on Friday, June 5.

Gary Brester, ag econ MSU photo by Kelly Gorham“Current record-high calf prices have occurred (in inflation-adjusted terms) three times since 1920 — in 1951, 1973, and 1979,” says Brester. “In each case, price spikes were caused by a combination of low cattle numbers and unusual market situations. Each of these record-high price events was short-lived — less than two years.”

In general, prices declined after each of these price spikes after outside economic conditions corrected themselves in response to world events. During these previous periods of high prices, cattle inventories increased for a short time.

Will history repeat itself after 2014’s record-setting cattle prices? Will these high returns to ranchers continue in response to lower world cattle inventories and continued strong beef demand?

Find out more by attending Montana Stockgrowers’ MidYear meeting and hearing from Dr. Brester at the Opening General Session. Event tickets are available online for a 20% discount if registration is completed prior to June 1.

The 2015 MSGA MidYear Meeting takes place on the campus of Montana State University in Bozeman, June 4-6. For more information, contact the MSGA office at (406) 442-3420 or visit our event page.

Looking Forward: What Does the Cattle Market Have in Store for 2015?

United States Department of AgricultureBy Brett Crosby, Custom Ag Solutions

The USDA’s National Agricultural Statistics Service (NASS) cattle inventory report for January 2015 confirms that beef herd expansion is underway.  The number of beef cows that have calved increased over 600,000 head in 2014 to 29.7 million head.  The increase in beef cow numbers is the largest since 1994 and the second largest increase in over 30 years.  The herd expansion was impressive by any measure, but especially remarkable given the cost of replacement animals and the smaller number of replacement females available compared to 1994, when there were 34.6 million beef cows in the U.S.  While increased herd numbers have been expected by many, the new inventory statistics and rapid growth leave many producers wondering what this means for cattle prices going forward.

While a 600,000 head increase is sizeable, the U.S. beef cow herd is still small by historical measures and has decreased by over 3.9 million since 1996.  Nearly half of that decrease, 1.7 million head, came in 2012 and 2013 alone, when a drought ravaged the Southwest and forced massive herd liquidations.  Even if cattle numbers continue to increase at the 2014 rate, it will take several years just to get the U.S. herd back to the size it was only four years ago.  Clearly, total per capita beef supply in the US will remain at historically low levels for several years while the U.S. population continues to grow, resulting in per capita beef supply and beef prices remaining at or near their current levels.

While the current herd expansion suggests that calf prices likely hit their high water mark in the fall of 2014, prices should remain strong in 2015.  The 2015 calf crop is likely to be 10 to 15 percent higher than 2014, but calf supplies will likely remain tight while producers retain inordinately large numbers of heifers during this expansion phase.  As a result, deferred feeder cattle futures suggest calf prices holding very close to the levels seen last fall.  Of course, there is still a long time between now and the fall, and corn prices and winter wheat conditions this fall will play a large part in determining calf prices late in the year.

Feed cost and forage availability aren’t the only sources of uncertainty for this year’s calf prices.  Exports have been incredibly strong and a strengthening economy has also supported domestic beef demand.  Therefore, a U.S. recession or a global economic slowdown could have a substantial adverse impact on cattle prices.  With the U.S. beef herd expanding and a strong dollar and soft oil prices indicating global economic uncertainty, there is more downside risk for cattle prices than upside potential.

With increased downside market risk, this is a good year to consider carefully managing price risk.  Forward contracts, futures, options, and RMA’s Livestock Risk Protection (LRP) insurance are all worth considering.  If fundamentals hold steady, the calf market is expected to remain strong, so producers should consider a risk management strategy that limits or softens unexpected downside market moves.  Also, because a repeat of 2014’s explosive upside move is unlikely, 2015 is probably a good year to consider early forward contracts at current price levels.

Despite national herd expansion, the next several years should remain profitable for cow/calf producers.  Beef demand domestically and abroad is strong, and heifer retention that is fueling expansion will help offset the effects of larger calf crops in the coming years.  With prices still near historic highs, however, a price risk management strategy should be employed to protect against downside movements triggered by high feed costs or macroeconomic issues.  For 2015, the old adage “Nobody ever went broke locking in a profit” is a good one to remember.

Custom Ag Solutions (CAS) is a USDA/RMA education partner that works to promote risk management tools, including Federal crop insurance programs such as the Livestock Risk Protection (LRP) program.

CAS neither sells nor services crop insurance policies.  For a list of crop insurance agents, please visit www.USDA.RMA.gov/tools/agent.html.  For more information, visit the RMA website at www.USDA.RMA.gov.

CattleFax Predicts Strong Prices to Remain in 2015

SAN ANTONIO, TEXAS – The popular CattleFax Outlook Session today at the 2015 Cattle Industry Convention and NCBA Trade Show gave cattlemen and women reasons to be optimistic. Analysts told the capacity crowd to expect fed cattle prices averaging in the mid-$150s, slightly higher than last year. Prices will trade in a range from near $140 at the lows to near $170 at the highs in the year ahead. While early year highs for 550 pound steers will range from near $285 to lows near $235. Analysts cited the improved forage situation, lower grain prices and record margins in 2014 for feeders and stockers as the primary reason cow-calf producers will remain in the driver’s seat for the year ahead.

Despite exceptional prices in 2014, CattleFax CEO Randy Blach said he expects the market peak is behind the cattle industry now.

“We put the top in the market in the past year and the signal for expansion has been transmitted,” he said. “We will begin to see some modesty expansion in herd numbers now and that will cause prices to trend lower in the years ahead than what we saw in 2014.”

He explained that growing supplies of cattle and beef over the next several years will rebalance the normal price and margin environment among industry segments.

“Prices will then retreat back to the lower end of the new trading range,” said Blach.

Despite the adjustment, he explained that cow-calf producers will continue to see relatively strong returns over the next four to five years, aided by corn prices expected to average $3.60 per bushel in 2015 and an improved forage production picture.

Art Douglas, Ph.D., Professor Emeritus at Creighton University, presented the annual weather forecast which projects moisture conditions in the United States through the summer.

“El Nino conditions have again built across the Pacific and this will fuel a split jet stream pattern into the Southwestern United States. Moisture will gradually increase in February from southern California to the southern High Plains,” said Douglas. “Snow-packs in the northern Rockies are expected to remain well below normal at 50-70 percent levels while the southern Rockies should gradually build their snowpack through March. As the jet heads east it will pick up Gulf moisture and lead to above normal rainfall throughout the southeast.”

“The pesky ridge in the West will gradually weaken during February and by the spring this will allow moisture to increase in the Pacific Northwest,” he explained. A strong Great Lakes trough is forecast to keep a broad portion of the United States colder than normal through the spring and early summer.”

Douglas said this pattern should lead to delayed planting in the Corn Belt with possible threat of late frosts into the late spring.

“The cool temperatures are likely to persist into early summer and this will slow crop progress but be ideal for corn pollination in July. The silver lining in the forecast is that the Midwest should turn warmer by August and September and this will help speed up crop maturation,” he said.

For more information about the Cattle Industry Convention and NCBA Trade Show visit www.beefusa.org and follow #CIC15 and #BeefMeet on Facebook and Twitter.

PBS Ag Live Answering Montana Ranching Questions

We hear about reduced inventories in beef cattle – what are the facts?

PBS Ag Live Answering Montana Ranching QuestionsGary Brester of the College of Ag has shared some of his research findings with Ag Live. To learn more about PBS’ Montana Ag Live program, visit their website. Submit your questions to be answered by MSU experts in future columns by emailing [email protected].

Inventories are, indeed, down in the US…increased support of crops has had some producers leaving cattle; even though cattle prices are up, a producer doesn’t see increased payoff until that cow is sold, but increased hay prices come long before that – some producers just can’t wait until day of sale; the age of producers is increasing; and technological changes haven’t helped cattle producers the way they might have helped crop producers (GPS, for example, has changed crop practices for many).

In the hog industry, structural change has almost eliminated hog cycles and cattle may be going the same route –a highly technological market has the power to change contracting practices or help establish alliances that haven’t traditionally existed.

In the US, if you compare numbers from 1999 to 2013, we have gone from about a 130 million head to just under 90 million…while Argentina has stayed at about 50 million, Australia is steady at  around 30 million and Canada is about 15 million.  Of that group, only the US has reduced numbers, but we are also the largest producer so that has ramifications worldwide.

Montana Ag Live Column is provided in cooperation with Montana PBS and Montana State University. To learn more, contact Dr. Gary Brester at MSU,