by Ken Root & Whitney Flach
Listen Here: Profit Matters 9-19-16
A livestock economist says this summer may have set up the trend for the years ahead. We?ve seen three years of falling prices after a spike brought on by prolonged drought in the Southern US and a drought in the Midwest in 2012.
Jim Robb, director of the Livestock Marketing Information Center, has been considering all the facts and taken a longer view of where he believes the cattle market is headed. He spoke with Ron Hays, farm director for Radio Oklahoma Network, about what producers can expect to see over the next few years. He says the summer of 2016 has set the stage for what?s coming.
While most of us worry about the day to day or weekly markets, Jim Robb, director of the Livestock Marketing Information Center, has been considering all the facts and taken a longer view of where he believes the cattle market is headed. He spoke with Ron Hays, farm director for Radio Oklahoma Network, about what producers can expect to see over the next few years. He says the summer of 2016 has set the stage for what?s coming.
?We really do think the summer of 2016 here was a bit of a turning point. Heifer slaughter has been up dramatically in recent weeks, cow slaughter is increasing,? Robb said, adding that this is happening a bit earlier than anticipated; signaling predictions of herd size growth. ?So the rate of growth in the cow herd, the initial signs of slowing down as we move through 2017, are kind of already in place. That leads us to believe that we?re going to have more meat in the marketplace – in fact in 2018, US beef production will be the largest since 2002.?
Robb says that is not the whole story though. He says it?s also the demand, growing exports and growing domestic population factoring in. He predicts that lower prices across the board, between 4 – 10% year-over-year declines, will appear in cattle prices in 2017 and 2018. After that though, he says some cyclical corrections will take place as herd size adjustments are made. At that point, Robb believes the downturn in prices will be behind us.
?It?s down the road, but especially in terms of cow/calf country – looking at 2018 really isn?t that far away in terms of breeding decisions, long-term management decision,? Robb said. ?We want people to recognize the price profile, the price declines, appear not to be over yet, but the rate of decline will moderate dramatically.?
