Harlan Ritchie, Steven Rust and Daniel Buskirk, Michigan State University beef cattle specialists, offer the following short- and long-term outlooks for U.S. beef producers.
The trends for the remainder of 2006 include:
- Corn prices in 2006 will average $1.75-$1.85/bu.
- 2006 fed-cattle harvest will tally 27.9 million head, up from 27 million in 2005.
- Fed-cattle prices will average $85/cwt. in 2006. Prices will trade in the low to mid $90s the first quarter, hit the low in summer at mid to upper $70s, and rebound to mid $80s in fall.
- The Choice/Select price spread will average near $10/cwt. in 2006, similar to 2005.
- Feeder-cattle prices (750-lb. steers) averaged $110/cwt. in 2005, but will be $3-$4 lower in 2006; while 550-lb. steers, which averaged $128/cwt. in 2005, will be down $3-$5 in 2006.
- Steer-carcass weights averaged 816 lbs. in 2005, but will be heavier in 2006.
- Bred-cow prices were record-high in 2006 with prices averaging $1,165; top-end bred heifers and cows brought $200-$400 more than the average. Prices will soften by late 2006 and 2007.
Looking at more long-term trends (2006-2010), the MSU trio says:
- Producer margins will narrow, likely turning negative for growers and feeders.
- Retail, foodservice and packer margins will improve as domestic slaughter and beef supplies increase.
- Cow-calf profit margins will remain positive, but prices will trend lower through decade's end.
- Significant structural change is underway in all industry sectors. A coordinated production system is evolving and feedyards will be the collection point.
- Fewer cattle will trade in the cash market and more will trade on a beef-value basis.
- Product branding will become the norm and more price differentiation will occur at all levels.
- Foodservice market share, as a percent of total beef sales, will surpass retail in the next five years.
- The U.S. will have to adopt animal ID and source verification in the post-BSE environment in order to compete in the global market.
- Because the U.S. meat supply is among the world's safest, demand for U.S. products will be strong.
-- Clint Peck
