Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel looks at beef production in 2018 and the factors that will determine beef price outlook..
"Continued growth in beef production in 2018 is likely to pressure cattle and beef prices. Cattle producers have a number of economic conditions to watch that will indicate the impact of factors they cannot control and that will have implications for those factors they do control.
"Domestic and international beef demand will continue to be critical factors affecting cattle and beef prices in 2018. The U.S. economy is currently strong with low unemployment and a stock market supported by lots of cash from earlier Federal Reserve stimulus. Economic growth has been rather plodding but steady over the past few years. Though inflationary fears have not yet materialized, the Federal Reserve began raising interest rates in 2017 as the economy gained strength. The recent tax cuts and proposed infrastructure investments could provide additional fiscal stimulus that adds to inflation concerns. This may pressure the Federal Reserve to raise interest rates more and faster in 2018 and beyond. Though no major change is expected at this time, macroeconomic conditions are a factor to watch in 2018.
"Record beef production is expected to combine with growing pork and poultry production to result in record total meat supplies in 2018. Wholesale and retail beef prices held up well to growing meat production in 2017, indicating strong beef demand and there is no indication it is changing going into 2018. However, ample meat supplies will continue to be a demand challenge for beef in the coming year. Pork and poultry production and trade are factors to watch this year.
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