Protein supplies have been abundant in the United States. The U.S. has seen the largest year over year increase in meat supplies since 1950. That was a major reason for the dramatic flip in cattle prices last year. CattleFax CEO Randy Blach presented the market outlook at the Cattle Industry Convention in San Diego. A year ago, the cow-calf side had peak profitability and the most leverage within the cattle segment. Over the next two or three years, he said profit margins will narrow, but that industry will continue to make money. The cow-calf segment will be profitable, just not has profitable.
For margin operators, last year was dramatic, drastic and breathtaking. Blach said this cycle has been no different, than what the industry has seen historically.
“Typically, within the first 12 to 18 months of when a market tops, we’ve given back all the equity that we made, assuming we weren’t hedged,” Blach said.
The cattle industry had record profitability from the middle of 2013 through 2014 in making $5.5 billion. Through last week, Blach said CattleFax data suggests the industry has given back $5.1 billion. He said that will get all segments of the cattle industry back to being margin driven, because equity has left the industry now.
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