By Blair Fannin
Texas A&M AgriLife
The nation’s beef cattle producers are in expansion mode and record-high cattle prices have likely seen a top, according to a Texas A&M AgriLife Extension Service livestock marketing economist.
“Over the long term, we are continuing to expand and prices are coming down from record highs because we are expanding herds,” said Dr. David Anderson, College Station. “We are starting to increase supplies and calf prices have been coming down. However, we will still see high prices since it will take some time to build our inventory back up.”
Dr. Clark Neely, AgriLife Extension small grains specialist in College Station, said recent rains will help forage and wheat growth, benefiting stocker cattle operators across the state.
“As of right now with all the rain we’ve had, we’ve got full soil profiles,” he said. “Right now, we are just having issues with portions of Central, South Central and Eastern Texas getting the crop in the ground. The High Plains and Rolling Plains did get it in the ground in a timely manner and have an above-normal crop rating. With all the moisture we’ve had, we’ve got good grazing potential for stocker cattle operators.”
Beef demand continues to be strong and Anderson said this has helped during times of record retail prices.
“I don’t think we’d have had prices where they were if it weren’t for consumer demand,” he said. “If you put consumer demand and price together, I think that’s pretty compelling for higher prices.”
Anderson pointed to the rise in gourmet hamburger chains across the U.S.
“You have this huge growth in these specialized burger restaurants,” he said. “This coincides with one of the fewest supplies of cows in several decades. The second driver is the popularity of Texas style barbecue. We’ve seen huge growth in barbecue restaurants nationwide. This comes at a time when we’ve also got the fewest cows. Overall, this is the strongest demand for beef in 25 years.”
Looking ahead to future cattle prices, Anderson said there are currently 2 percent more cows and 2 percent more calves in the U.S. than a year ago.
“Through 2017, I’ve got every quarter of the year projected with more beef production than the year before,” he said. “I think we can continue to look for strong cattle prices and positive-side demand for beef.”
Recent declines in calf and cattle prices are largely due to record-high cattle weights resulting in more beef production, Anderson said.
“More imported beef and reduced exports are pressuring prices lower, too,” Anderson said. “But, as the fed cattle backlog is reduced, then price will rebound higher.”
Anderson said for the first quarter of 2016 he projects Southern Plains #1 500-600-pound steers at around $216 to $222 per hundredweight. Second quarter prices in 2016 are projected at $220-$227 per hundredweight, while third quarter prices are projected at $215-$224 per hundredweight. For the fourth quarter, Anderson projects prices to be $207-$216 per hundredweight.
Currently, some estimates of annual cow costs are around $700 per cow. Factoring in an average selling price of $1,100 per head for calves leaves cow-calf producers in a profitable position.
“But, longer term, increasing cow numbers and beef production means prices are headed lower,” Anderson said