What is in this article?:
- Beef cattle prices continue surge
- USDA data illustrates the supply picture
- Grain prices and other factors play prominent role in cattle markets
- K-State ag economist outlines factors behind record highs
- Many cow-calf producers will likely continue to respond to high prices by selling off cows.
- Exports were strong in 2010 and there is every current indication that will continue throughout this year.
Tight supplies and strong demand propelled fed cattle values into another record-breaking week Feb. 28-March 4, but cattle feeders’ profits are not as lofty as some might expect, according to Kansas State University agricultural economist, Glynn Tonsor.
Average prices for cattle in U.S. feedlots hit $112 to $113 per hundredweight March 2 – a $1 to $2 increase over the previous week’s record-setting prices, according to the U.S. Department of Agriculture. That was $19 to $20 per hundredweight higher than the average price of about $93 a year ago and about $25 per hundredweight higher than the five-year average (2005-2009).
“Fed cattle prices are expected to generally increase throughout this year, but profits won’t necessarily rise or set historic records because of higher corn and feeder cattle prices,” said Tonsor, who spoke at K-State’s Cattlemen’s Day in Manhattan March 4.
Based on CME live cattle futures, Tonsor said second quarter prices are expected to average about $115 per hundredweight , third quarter expectations are around $117, and fourth quarter prices are projected to average $119 per hundredweight.
With regard to beef supplies, Tonsor, who is a livestock marketing specialist with K-State Research and Extension, noted that many cow-calf producers will likely continue to respond to high prices by selling off cows. The shrinking cow herd ensures beef supplies will continue to tighten for months to come.
“That part of the support in (cattle) prices will not change for at least another 18 months as 2013 appears to be the earliest that will change in a national, aggregate sense,” he said.
Tonsor said despite the historically high prices feedyards are paying for cattle, some are willing to run at a loss as long as they cover their variable expenses. Both feedyards and slaughter plants have an over-capacity situation right now, which is helping boost light-weight steer prices beyond some break-even calculations, he added.
Cattle prices also are being boosted by strong demand from U.S. as well as overseas buyers.
“Exports were strong in 2010 and there is every current indication that will continue throughout this year,” the economist said, adding that the weak U.S. dollar, compared with other currencies, has benefitted the export scenario.
In addition, the U.S. is importing less beef than it has in recent years, he added, noting that beef and veal imports in 2010 were below the previous year’s number and below the most recent five-year average.