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Cattle Markets: New Abnormal

Cattle Markets: New Abnormal
Cattle-Fax predicts higher prices for cattle and inputs, plus record volatility.

Cattle-Fax is predicting continued record prices for both cattle and beef production inputs.

Analysts for the marketing research group made the prediction during the annual Cattle-Fax outlook seminar Friday at NCBA's convention and trade show in Denver, Colorado.

Randy Blach, executive vice president, said during his summary that fed-steer prices during 2011-2015 should vary from the low- to mid-$90s to $120 per hundredweight.

But he also warned, "Record-high prices don't mean record profits."

Blach noted the costs of producing a calf are $250 higher than they were less than a decade ago.

Blach also said beef producers should expect and be prepared for a market situation like nothing they've ever experienced before. He said:

* Manage both input cost and marketing price risk because the extreme volatility will create such general risk.

* Work with lenders, cultivating relationships that will provide you with greater capital. The new business structure will require it.

* We're truly in a global market today so the old rules and market movers are no longer reliable signs.

The Cattle-Fax analysts also said prices on all classes of cattle should set more records again this year.

They believe calf prices will get high enough to finally encourage herd rebuilding.

They say U.S. consumers will eat less beef in coming years but export markets are strong and should continue expanding.

Further, ethanol production will use about 40% of corn production 2011-2012. This and other pressures, including record-low global stocks, could push corn prices to or above $7.50 later this spring or summer.

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