I'm cautiously optimistic on the cattle markets; How about you?

I'm cautiously optimistic on the cattle markets; How about you?

For some, autumn means pumpkin spice lattes, football games, crunchy leaves and apple picking. For ranchers, autumn is one of the busiest times of the year, with things like weaning, working and bunk-breaking calves, harvesting crops, pregnancy-checking cows and preparing for winter topping a to-do list that seems a mile long.

October on our operation means all of those things plus hosting a fall female sale, attending beef industry meetings and rooting for my youngest sister, Kaley, as she competes in the National Beef Ambassador contest in Denver and the National FFA Convention in Louisville, Ky.

Without a doubt, fall is certainly a busy, hectic time of year, but it’s also one of my favorites as it’s a time to find out how well your calves grew on summer pastures, and to cash in on a year’s worth of breeding decisions when selling calves.

A recent beefmagazine.com poll asked readers for their outlook on fall cattle prices, and 57% say the fall cattle market will be great. These optimists expect prices to stay strong for the remainder of 2015. Meanwhile, 43% of respondents say prices have been too good for too long. These folks think negative market psychology will cause cattle prices to weaken. While the online poll isn’t statistically significant, I think the results are instructive.

The optimists have reason for their outlook. BEEF columnist Harlan Hughes projects that earned net returns in 2015 will be the second-highest on record, exceeded only by earned net returns last year. Yet, with increasing cattle supplies and global economic uncertainty, softer prices are expected for the remainder of the year, but still at historically high levels.

“We’re not going to make the very strong calf and yearling markets that we did in the fourth quarter of 2014,” says Jim Robb, Livestock Marketing Information Center director. “We're going to have the second-highest calf market ever, but it’s certainly a softer market on a year-to-year basis. Fed cattle prices will be down year to year in the second half, still seasonally stronger.”

USDA’s Ag Marketing Service (AMS) agrees and predicts lower prices compared with 2014. “On a quarterly average basis, fed cattle, yearling [700- to 800-pound steer] and calf [500- to 600-pound steer] prices all cyclically peaked in the fourth quarter of 2014,” AMS analysts explain. “Still, those prices posted year-over-year gains in the first half of 2015, but are expected to be mostly below a year ago for the balance of this year and throughout 2016.”

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At BEEF, our editors recently sat down to discuss our predictions for the rest of 2015 and early 2016. We don’t expect the market to collapse, but anticipate cattle markets will decline year over year on average. We will likely see cattle numbers increase as more heifers are retained, but warn producers not to bite off more than they can chew. Plan for the inevitable price drop, and expect volatility in light of global economic shake-ups and increased societal demands from U.S. consumers.

Autumn is finally here, and in the hustle and bustle of this busy season for ranchers, I’m choosing to be cautiously optimistic. How about you?

Amanda Radke is a South Dakota rancher and editor of the BEEF Daily e-newsletter.

 

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