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Supplies Will Lower Retail Meat Prices, Affect Cow-calf Returns

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Consumers are paying less for red meat and poultry this year, and USDA’s Economic Research Service says that trend will continue through the end of 2017. The agency expects a moderate increase in meat prices neat year.

Lower retail meat prices are a result of increasing supplies, and through August USDA said the U.S. cattle herd was the largest since 2008. Excellent feedyard profits the first half of this year and an increase in feeder cattle supplies have put more cattle on feed and increased beef production more than 3%. Total beef production this year will reach 26.2 billion pounds, the largest total since 2010.

Sterling Marketing projects U.S. beef production will increase another 3% during 2018, adding further pressure on calf and feeder cattle prices.

Weaned calf prices are down 30% from just two years ago, and Sterling Marketing projects another 3% decline next year. Those declines have dramatically lowered average cash cow-calf profits, which were estimated at $430 per cow in 2015. This year cow-calf profits will average approximately $130 per cow, a 70% decline from two years ago.

If calf price projections are accurate for 2018, cow-calf profits will further decline to about $75 per cow.

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