Growing Beef, Pork And Poultry Supplies Putting Pressure On Prices, Says CattleFax Analyst

Cattle producers gathering at the Summer Cattle Industry Conference last week in Denver were reminded about how strong the cattle market has been. One of the featured speakers was CattleFax Senior Analyst Kevin Good. After his presentation, he was interviewed by Ken Rahjes of AgView.net about how good it’s been and how good prices will continue to be for a while longer. Good said producers have seen some great years in terms of price and profitability in 2014 and now drought recovery with the exception of the west coast. He said producers have the best moisture conditions in 20 years, the highest calf values on record and herd expansion has started to take place. He predicts the cowherd could be 1.3 million head bigger by the start of 2016.

That’s good news, but in looking longer term that means more beef production in the coming years and American consumers will need to consume more of that product. Good said the big unknown is the price level at which the consumer will eat more beef.

One of the challenges of aggressive herd rebuilding is tighter beef supplies. Beef also has increased competition from pork and poultry. Good said pork and poultry supplies this year are up five to six percent and he looks for both sectors to increase production in 2016. So far that’s hasn’t effected beef, but that’s changing. Good said this summer there has been less featuring of beef and more featuring for the other meat products. In looking at beef demand for June and July, he said demand is falling below 2014 levels, just like cattle and beef prices.

Another challenge is the strong U.S. dollar. Good said the strong dollar makes American beef, pork and poultry products more expensive on the global market and it also invites more product into America. The U.S. also continues to fight for trade access in key markets. Good said the U.S. is shut out of Russia for all proteins, China and many other countries because of the Avian Influenza outbreak.

“So, with all of those head winds, we’re having to consume more product at home,” Good said.   “Per capita supplies of all proteins combined is going to be up about eight - nine pounds this year, which is a huge year over year change.”

Good said the abundant protein supplies has pork prices down 25 to 30 percent, poultry prices down ten percent. In going into the second half of the year, beef prices are also starting to fall year over year.