Record beef prices
¦ Fourth quarter 2013 cash and fed cattle futures marched to record highs of $132 per cwt. Fed cattle futures suggest cattle prices should set record highs again in 2014’s first half with feeder cattle topping $162 per cwt. in November.
The key beef complex driver is tight supplies linked to prolonged drought in the Great Plains and earlier lack of profitability. So far, consumers have been willing to pay up for already pricy beef. That’s lifted wholesale prices allowing packers to pay more for cattle.
However, beef will likely face consumer resistance at some price, which could limit further gains in cattle prices. Consumers have responded to a series of record retail prices for beef over the past few years by turning to chicken or pork, which are cheaper per pound.
How long the market will be grappling with tight cattle supplies is unclear. Drought conditions have eased in much of the Great Plains. Corn Prices for 2013 crop corn are much lower than a year ago.
Cow herd expansion may already be underway. That will further tighten immediate beef supplies, but bring larger supplies later. Beef cows and feeder cattle should remain valuable property for at least two years.
Positive hog outlook
¦ Falling feed prices make the 2014 hog outlook almost the opposite of what it was last year. Lower feed costs and higher hog prices point to profits somewhere in the $20 per head area. That’s roughly the same size as expected losses based on year-ago prices. Recovery should help stabilize producer finances.
Expected profits will likely lure producers to expand breeding herds. Lower feed costs will likely result in heavier market hogs coming to slaughter, boosting pork supply a bit.
Expansion could put more pork on the market by 2014’s second half, pressuring prices and profits. The hog industry had difficulty sorting through impacts of baby pig losses due to the spring outbreak of porcine epidemic diarrhea virus. Such uncertainties could crop up again in 2014.
2013 farm bill
What farmers and consumers really need is for Congress to pass a farm bill by the end of the year. House and Senate conferees have been working on the farm bill since October, so the possibility is there that one will be passed and signed into law by the president, but don’t hold your breath. This Congress has agreed on very little so far this year. Passing a farm bill in 2013 would be a good first step in showing the American people that they can at least accomplish that much.
Here’s to a happy and healthy holiday season with your loved ones.