2015 could be a good year for producers
By Diego Flammini, Farms.com
The United States Department of Agriculture (USDA) recently reported all cattle and calves in the country as of the beginning of January 1, 2015 was 89.8 million, up by 1% from the 88.5 million on January 1, 2014.
Beef cows in particular were at 29.7 million, a 2% increase from January 1, 2014.
2014 provided producers with a record year from a price and profit vantage point and many are wondering if the trend will continue. So far, signs point to another good year for beef producers in 2015.
“Beef supplies in North America will still be tight – tighter than 2014,” said Anne Wasko, Marketing Analyst for Alberta’s Gateway Livestock. “So that’s certainly still a positive from a price perspective and will likely keep prices generally higher on average than 2014.”
The variable with the most chances of impacting the market is demand – how much will consumers pay and how much more beef will they buy? Even with record prices last year, beef saw a 6-7% increase.
Another factor that could impact the beef industry is the status of the Canadian dollar. Currency converter website xe.com lists the exchange rate as 80¢. Wasko says Canadian beef exports in 2014 were strong and that lower fuel prices could also help keep the demand strong.
“Margin operators in the cattle sector will likely be looking at smaller margins this year simply due to higher cattle costs but cow/calf producers should still be looking at a profitable year assuming moisture conditions and feed costs remain manageable,” she said. “There are plenty of risk management tools for producers to use today to mitigate price risk in a very volatile marketplace. Access to credit will also be a constraint at current price levels.”
Cash cow