Summer 2018 – Cattle Update
Beef producers have been given the signal to continue to expand their herds. And with that expansion, 2018’s production is expected to rise more quickly than it did last year (USDA is anticipating seeing a 3.9% increase over 2017). Even with the higher animal and feed costs this past March & April, producers have seen positive returns in the last 18 months. Strong foreign & domestic demand assisted in supporting the market prices in the first half of 2018 which consumers & producers alike welcomed. And with that continued high demand, we should see a balance in the growth this year.
Consumers are enjoying the lower beef prices and with the rise in take-home pay from the recent tax reform, they now have more to spend in the peak summer grilling season. Looking into the near future, USDA is also expecting additional beef production to drive prices below 2017 levels by this December.
The future growth and success in beef will be realized with the continued expansion of export markets. US beef exports jumped 17% in 2017 (due mostly to Asia) and 2018 should still see an increase even with Japan’s decline in exports.
With growth and hope at hand, we also have to consider concerns and the biggest right now is drought. Currently 34.22% of the US is categorized in a moderate to extreme drought. With drought, this may lead producers into slower expansion and result in an increase of selling off their herds. As we experienced in 2017, weather has a huge impact on producers whether dealing with drought & fires or rain & flooding.
References:
“Cattle & Hogs.” Farmer Mac – The Feed, Summer 2018, https://www.farmermac.com/flipbook/2018-summer/
National Centers for Environmental Info – Drought.gov. “Current Conditions.” National Integrated Drought Information System, through 16, June 2018, https://www.drought.gov/drought/data-maps-tools/current-conditions
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