Expectations
That is if it’s a crowd of cow-calf producers.
Mark attended the CattleFax 2014 Outlook and Strategies Session last week where he said the mood was decidedly mixed.
“The audience is representative of who we work with —producers and end-users,” he says. “Depending on who you were talking to, they have a different opinion of record high prices.”
Among the ranchers there was “tons of optimism,” but cattle feeders are discouraged by the calf price predications. CattleFax expects a 550-lb. steer to settle at $190/cwt. in 2014. That compares to a previous high of $168/cwt., set in 2012. Yet, those feeders find the good news in the record high Choice cutouts (around $205/cwt.) and lower cost in terms of grain inputs.
The quality grade premiums matter to more feeders than ever. In 2013, 77.5% of cattle were sold on an alternative system versus 22.5% sold cash. Just over half of all fed cattle were sold cash in 2005.
What’s that matter to you? Well, I think Tim Schiefelbein summed it up best a few years back when he said, “Even if you don’t grid your cattle, you do.” (Get the whole scoop on what he was talking about here.)
Basically it all points to the fact that a marketing trend like that begs better cattle. So if you provide them, you’ll be well positioned to deal with this new reality.
At the seminar, it seemed there was little for end users to feel hopeful about, Mark said, unless you count the distant effect of herd rebuilding. Cow slaughter will see sharp decreases while heifer retention is expected to go up by 140,000 head next year and 250,000 in 2015.
Still, the supply situation and price projections worry some more than others.
“I sat by one of our CAB-licensed distributors and they realize prices are high, but as they deliver a quality product, they think they can manage them,” Mark said.
Did somebody say “price-value relationship”?
It all boils down to: It’s a great time to be in the cattle business, but much is expected of you.
May your bottom line be filled with black ink,
Miranda
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