Drought relief expected, cattle profits continue

The LaNiña weather pattern has been causing wide-range drought across the United States for the past few years. CattleFax meteorologist Art Douglas said we should expect to get through the next three months and then see relief from the drought.

CattleFax market analyst Mike Murphy said farmers in the states where most corn, soybeans and wheat are grown will likely not change their acreage planted by much for 2018.

“Corn prices should move higher in the summer, but we still have to remember there are technical and weather risks that can affect everything,” said Murphy. “Yield potential will be based on the timeliness of moisture. We expect to see average yields of 172 bushels per acre this year.”

With an increase in cattle, hog and poultry supplies, Murphy said more grain will be used for feed, but ethanol and exports are still very important to crop producers.

Senior CattleFax analyst Kevin Good said all segments of the beef industry have seen profitability in the past year.

Since 2006 a decrease of 1.27 million head of cows has been seen due to drought. The expansion and rebuilding of the cow herd is expected to slow in 2018.

Exports of beef have helped keep prices at profitable levels. In 2018, beef exports are expected to increase by 6 percent. In 2017, 16.6 billion pounds of U.S. meat was exported. These exports increased per-head value by $335 in 2017.

Domestic consumption of beef is expected to slightly increase in 2018, which has been supported by the improved economy.

“We expect fed cattle to average $115 per hundredweight for 2018, 750-pound feeder steers should average $145 per cwt. and 550-pound feeder steers should average $158 per cwt.,” said Good. “Bred cow prices will be down a little in 2018, with an average of about $1,500 and utility cows should average $60 per cwt.”