CattleFax's Kevin Good Says Cattle Market "Price Shock" is Over, Optimism for 2016Tue, 23 Feb 2016 15:22:36 CST
2015 was the second most volatile cattle market in history. That’s according to CattleFax analysts at last month’s Cattle Industry Convention in San Diego.
“We had a huge year over year increase in production as well as supply in 2015,” said Kevin Good, CattleFax senior market analyst. “It’s a combination of, actual beef supplies were down, too, but exports were down, imports were up so there’s more beef on the domestic market. Pork supplies up seven percent. Poultry supply up four percent—so total meat supplies in 2015 increased by ten pounds per capita.”
Herd rebuilding will continue. The cow-calf segment is still in the black, though at much lower profitability. The market analyst expects 2016 fed cattle prices to settle between $130 and $145.
“We’ve already had the supply shock to the system,” Good said. “With that supply shock we had a price shock. First it was pork prices were down and then it was poultry and finally beef. Let’s look at 2016: we need to recognize that some of the worst is behind us as far as revaluation of cattle and beef.”
As farmers and ranchers grow their herds, Good says the market gives clues to the kind of quality it wants.
“In fact if you look at the Choice spread of this past year in 2015, it’s a good example we produced more Choice and Prime product than we did years with past,” Good said. “At the same time the spread held at about the same level. So this just tells us as we break down the different components: Prime demand, better than a year ago; Choice demand, better than the year prior. Select demand was actually down in 2015.”
A strong U.S. dollar is hurting exports. Millennials are helping foodservice beef sales. The list of market factors goes on and on, but CattleFax predicts a net positive effect for the year ahead.
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