Forecasts of cattle market prices have everyone in the beef industry on edge as they estimate prices may fall even further; however, that’s not the only interpretation of what the future holds.
One of the main stories in the U.S. cattle industry this spring and summer has been low cattle market prices. In mid-March, finished cattle prices were around $140 per hundredweight before they began to fall. In late July, cattle market prices for finished cattle were at $115 per hundredweight. Since then, the market has been trending between unevenly steady and weak.
The biggest issue lies in the futures market. It’s suggested that prices will fall another $5 by the end of 2016 and plummet to around $100 in the summer of 2017. However, many believe that such fears are unfounded. Read on for a summary of how cattle market prices could recover.
Causes Behind Fluctuating Cattle Market Prices
Prices have fallen for a number of reasons. One main cause starts with abundant grass, according to an agriculture.com article. Good grass made for heavier calves entering the feedlot. This created a shift to heavier weight placements and increased marketing out of feedlots. The larger number of cattle coming out of feedlots lowered market prices.
In response, even more cattle have come to market as feedlot managers are looking to sell before prices drop even further. However, these cattle are lighter in weight, as they didn’t have the benefit of such good grass and time feeding on it. However, it still creates too much supply at a time when beef prices for consumers are still high. This is especially true in comparison to low pork and chicken prices.
A Recovery of Cattle Prices
This could all signal a slowdown in herd expansion. More female cattle will be sent to market, adding more inventory to the beef supply. The numbers show this was happening in both May and June of 2016.
A high supply will drive consumer prices down, creating an incentive for consumers to buy beef. As demand rises, and supplies begin to dwindle because most producers have put herd expansion on the back burner, cattle market prices should have the opportunity to climb once again.
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