Peel Analyzes the Break Down in the Cattle MarketThu, 29 Jan 2015 12:32:45 CST
The cattle market has gotten off to a rocky start in 2015. Since the start of the year, live and feeder cattle markets has seen volatility and sell-offs. Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel said most of this is external to the cattle industry.
"The pressure has come through the futures markets, things like lower energy prices, the strong dollar, it's really the investor side of this market that has impacted the futures markets, but it has spilled over into cash markets recently," Peel said. "So we have seen a bit of run down in these cash markets, some of this stuff will pass here I think relatively soon and these markets will get back on track."
Radio Oklahoma Network Farm Director Ron Hays featured Peel on the Beef Buzz feature. Click or tap on the LISTEN BAR below to listen to today's Beef Buzz.
The good news is the fundamentals of the cattle markets haven't changed. Peel said the supply fundamentals are still very tight and he is looking for a continuation of strong prices near record levels. On Friday, the US Department of Agriculture will release the U.S. Cattle Inventory report and Peel looks for this report to confirm what is already expected.
"That there was some beginnings of herd expansion," Peel said. "Overall cattle numbers may be up slightly, I think they will be up very slightly. Feeder supplies will probably come in a little bit smaller than a year ago, because the calf crop was actually smaller in 2014. Among the heifers, more of them are being held as replacements, which probably means there are less of them out there as feeder heifers, so I think feeder supplies will actually show up as a little bit tighter than a year ago."
The U.S. cattle industry would like to see this report show a solid indication that heifers are being retained and producers are starting to rebuild the U.S. beef cowherd. That is something that needs to be done to continue to supply more beef to consumers down the road.
One factor that could impact herd expansion in the Southern Great Plains is the ongoing drought. The latest U.S. Drought Monitor report shows at that nearly 95 percent of the state is now receiving a drought rating. That's a drastic increase since the beginning of the year when 74 percent of the state was receiving a drought rating. Peel is concerned about the expanding areas of marginal drought.
"It's not really a big issue right now in the middle of the winter, but it does set the stage for a bigger threat as we approach spring time and the spring growing season," Peel said. "If these dry conditions persist, then we could find ourselves into some fairly serious drought issues very quickly as we get into the spring."
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network- but is also a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show- and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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