Northwest FCS Beef Cattle Market Snapshots

Northwest Farm Credit Services Vice President of Market Research and Development Michael Stolp shares details from the third quarter results of the Beef Cattle Market Snapshot.

Stolp: "Cattle markets have strengthened. Expectations of record corn production have pulled corn prices down resulting in lower feed costs and improved margins for cattle feeders. Cash market prices for cattle rallied in July and August after declining every month since the beginning of 2013. Tight supplies will continue to support cattle prices for the foreseeable future. Demand from feedlots is expected to remain strong as they seek to secure inventory. Global and domestic demand is strong despite high prices."

The Market Snapshot states the decline in the U.S. beef cow herd in recent years has reduced the supply of calves for feeding. As a result, there is excess capacity in the cattle feeding and cattle slaughter industry segments. This dynamic tends to place pricing leverage in the hands of the cow calf producer. Caught between cow calf producers and consumer demand, the cattle feeding and slaughter segments are experiencing margin volatility that should continue through the end of 2013 and beyond.

Pasture conditions in the Pacific Northwest are concerning in some ares with forage shortages and dry conditions continuing to plague pockets of Idaho and Oregon.

The snapshot also mentions that the United States monetary policy continues to weaken the dollar. The weak dollar will create opportunity for beef exports, further straining already tight supplies.