What is in this article?:
- Beef Cattle Short Course focuses on drought, future challenges for industry
- Be careful with futures
- Strong cattle prices forecasted.
- Tight supplies to continue.
- Drought continues to force deep herd reductions.
Even if rebuilding of the nation’s cattle herds were to begin today, it would be several years before inventory would reach a significant number, according to an industry economist.
“Even in best case scenario, we will not see additional beef on the table until 2015,” Brett Stuart, an economist with CattleFax, told 1,450 attendees Monday at the 57th Annual Texas A&M Beef Cattle Short Course, sponsored by the Texas AgriLife Extension Service.
Drought through much of the southern U.S. continues to force deep herd reductions. And Stuart said steer and heifer slaughter numbers continue at a steady clip.
The volume of heifers that continue to go into feedlots indicates the beef industry is still “in a contraction phase," he said.
If the beef cattle industry were to start the rebuilding phase today, Stuart said, the amount of time it takes to hold back heifers, have a calf, then make it to the feedlot before finally arriving at the retail meat case would be several years.
However, there are some positive indications for Texas ranchers dealing with a historic drought statewide, he said.
“Supplies are going to be very tight for the next five plus years,” Stuart said. “There are good days ahead; that’s the bottom line.”
He forecasts average fed steer prices at approximately $95 per hundredweight to $125 per hundredweight through 2015, while 550-pound steers are projected to average in the $140 to $170 hundredweight range “for the next several years or foreseeable future.”
Though the Texas drought is taking a toll on ranchers, Stuart offered words of encouragement.
He said global meat production will need to double by 2050 to meet growing demand. Typically, beef cattle markets hit highs during the months of April through May then hit a low point during the fall season. However, with almost a one million head shortfall projected nationally, Stuart said producers may not see the typical season low point in market prices this fall.
Also helping higher cattle prices has been the overall strength of commodity prices, Stuart said.
“We have doubled the amount of volume in live cattle futures contracts,” he said. “Commodities are very sexy to investors right now. There’s a lot of money in cattle futures right now.”
Stuart said institutional funds have to roll those funds in and out of expiring contracts, but warned it’s “easy to scare investment-class money out of our futures.”