2-3 IAT Beef and Dairy
Michael Stolp is Vice President – Market Research and Development for Northwest Farm Credit Services and I get together once a quarter to hear what’s happening in ag.
Beef -- 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.
Dairy -- After enduring depressed milk prices, rising feed costs and negative profit margins for much of the year dairy producers closed 2013 with strong profit margins fueled by rising milk prices, falling corn prices, and historically high U.S. dairy exports. Milk prices are expected to remain strong in 2014, but could be pressured by increased competition in global export markets. Milk production in Oceania and the EU is expected to increase. Although lower feed costs are expected to support dairy producers’ profit margins, prices for soybean meal, alfalfa, and other feed ingredients remain high relative to declines in corn prices.
