Livestock Economist Derrell Peel: Record-High Beef Prices Probably PeakingThu, 17 Apr 2014 12:25:32 CDT
As we continue to see record-high prices in the cattle complex in 2014, Oklahoma State University Livestock Market Economist Derrell Peel says those prices are being affected by seasonal variations and we should expect to see them back off soon.
"There are indications that most of the cattle markets have topped for this spring-for different reasons. Boxed beef has come down fairly sharply recently from the second rollercoaster high this spring. That's squeezing the packer side of things in terms of their revenue side. Fed cattle prices haven't actually come down very much, just a little bit. But it does look like they've topped and I do expect them to work lower as we move through the second half of April and certainly into May and June."
He said the reason for that is the seasonal increase in fed cattle sales and slaughter increases from late May into June. That increase in supply will pressure prices lower.
A cold spring which is delaying forage production will also have its impact on the markets, Peel says.
"I think that's the biggest issue up to this point in terms of forage issues right now. Folks had more hay, in general, last winter, but I think we've used most of that hay up and we just haven't had the right kind of conditions. Some places have moisture, others don't, but even the places that have moisture have seen really delayed forage production."
He said feeders are keeping a close eye on the corn crop and are growing a little concern with projected decreases in planted acres and weather delays in getting seed in the ground. Those factors will increase volatility in the feeder markets.
Another factor that will soon affect the markets, Peel said, is the drought. Much of the country is under at least mild drought conditions and spring rain patterns have not yet established themselves.
"Producers that are in those areas within the next very few weeks, the next 30 to 45 days, are going to be faced with either carrying forward with the plans they had or being forced back on the defensive a little bit. We may not be able to hang onto all the replacement heifers that we started the year with. And, so, I think the question of herd expansion in 2014 will play out in the next 30 to 60 days."
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