Lower Feed Costs Support Profits

According to the most recent Northwest Farm Credit Services Cattle Market Snapshot, the beef cattle markets closed 2013 strong. With record high cattle prices as year over year fed cattle prices increased 8 percent and feeder cattle rose 11 percent.

Northwest FCS Vice President of Market Research and Development Michael Stolp shares more details from the fourth quarter results of the Beef Cattle Market Snapshot.

Stolp: "Cattle markets continue to strengthen. Prices for feeder and fed cattle are at record levels. Falling feed prices are the most significant variable supporting feeder cattle prices. Year-over-year corn prices have fallen from near $7 to low- to mid-$4 per bushel. With improved profit margins, feedlots are bidding up prices in order to secure inventory. Tight supplies will continue to support cattle prices for the foreseeable future. Global and domestic beef demand is strong, supporting fed cattle and beef prices. However, continued beef price increases may challenge consumer demand."

 

The Market Snapshot discusses the region's moisture conditions with the USDA Drought Monitor reports moisture conditions in most of Montana, Northern Idaho and pockets of Central Washington and North Central Oregon as 'normal.' Moisture conditions in areas of Southeast Oregon, South Idaho and much of California are reported as 'severe drought', with select areas described as 'extreme drought' in Southern Idaho and Central California. Above average precipitation is necessary to recharge moisture in drought affected areas to support forage for 2014 grazing.

The snapshot provides the following outlook: a record large 2013 corn crop and improved pasture conditions support strong cattle prices. Expectations are for stable beef cow numbers in 2014 and rising beef cow numbers in 2015. Beef imports this year are projected at levels similar last year. Per capita U.S. beef supplies are forecast tight for two to three years.