Eroded Beef Prices in Third and Fourth Quarter of 2015

Eroded Beef Prices in Third and Fourth Quarter of 2015

According to the most recent Northwest Farm Credit Services Cattle Market Snapshot, Cow-calf producers are wrapping up the second most profitable year in history. Fourth quarter 2015 markets adjusted closer to long-term sustainable cattle prices, with the softening in price expected to continue.
Northwest FCS Vice President of Customer Insights Michael Stolp shares more details from the fourth quarter results of the Beef Cattle Market Snapshot.
Stolp: “A prolonged period of strength and steady gains resulted in historically high cattle prices through the first half of 2015. However, market cycles pressured prices lower through yearend as the 2015 calf crop increased with rising numbers of heifers coming into calf production. Exports were also lower through the third quarter, slowed by a strong dollar. Beef and cattle prices are expected to stabilize near the long-term trend in the next three years.”
The market snapshot also discussed feedlot margins as well. High feeder cattle prices contributed to the large losses feedlots experienced through much of 2015, especially cattle marketed later in the fourth quarter. Input costs increased despite lower grain and feed prices, which were offset by increased prices of feeder cattle. Losses increased as fed cattle prices were 22 percent lower at the same time. Feedlot and packer losses generally put downward pressure on feeder cattle prices and demand is expected to decline in 2016. Experts do not expect relief for cattle feeders in the first half of 2016.
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