Cattle prices likely to remain low in 2017 as cattle inventories continue to grow
Cattle prices will likely continue to decline in 2017, as cattle inventories across the country will continue to expand.
According to Kansas Agland, steer prices in 2017 for 500- to 600-pound feeders will be $127-$132 per hundredweight in the first quarter, $131-$138 per hundredweight for the second quarter, $127-132 per hundredweight for the third quarter, and $122-$132 per hundredweight for the fourth quarter, AgriLife Extension livestock economists project.
During the recent Blackland Income Growth Conference in Waco, Texas, Jason Johnson, Texas A&M AgriLife Extension economist discussed cattle market trends. He said cattle prices began a rapid 40 percent descent in 2016, due in large part to a 3 percent growth in cow herds.
In 2015, when cattle prices hit historic highs, Johnson said feedlot operators were bidding up on feeder cattle to keep pens full, as they operate much like hotels, which aim to keep high occupancy rates.
This resulted in losses of $300 to $400 per head, causing many feedlot operators to be more careful about how much they paid in 2016.
“Overall, I think the bubble has been burst. We are now back down to more historic spread levels. I don’t think we will see another drop quite so dramatic, as inventory and price expectations have returned to levels that should permit some participants at all levels of the supply chain to be profitable,” Johnson said.
Johnson anticipates that the cattle inventory will continue to build up over the next two to three years, but he said that doesn’t mean the prices will continue to decline.
He also said that export trade opportunities will help market the excess beef.