CattleFax analysts at the 2018 Cattle Industry Convention and NCBA Trade Show took a look at the industry’s profitability during 2017 and forecasted for the year ahead, and the outlook is good. Analysts noted that U.S beef cow inventory increased 2.8 million head in four years, and an additional 200,000-400,000 head are expected to be added to the herd over the next few years. CattleFax Senior Analyst Kevin Good said there are growing supplies of protein coming to market during the year ahead, including large supplies of competing proteins, which will weigh on all beef prices.
“We have a bigger supply of all proteins ahead in 2018. For the past year we were very fortunate to have solid export volume,” said Good. “We are forecasting trade to increase year-over-year in 2018, but still, the rate of production is out-pacing the rate of exports.”
Although beef production is expected to increase to 27.5 billion pounds during 2018, Good said current consumer demand is expected to remain good and potentially increase as retail prices moderate. He said CattleFax is predicting beef to remain a strong competitor against other proteins.
“Demand is robust on all fronts. Domestically, retail demand is increasing and beef is being featured more in the consumer markets,” said Good. “The retail and foodservice industries are doing very well and the solid economy in the United States is one of the main drivers as unemployment rates continue to decline and per capita income rises.”
CattleFax analysts predicted fed cattle prices lower than prior year levels, averaging $115 per hundredweight. Good said fed cattle prices are likely to face resistance near the $130 level, with downside risk in the upper $90 range. He predicted bargaining position will continue to favor cattle processors and retailers, with profit margins at or above 2017 levels.
Keep reading:
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