Source: Michael Fielding, MEATINGPLACE, 5/17/16


Recent rains have improved the cattle outlook for spring and early summer, but cattle prices are moving lower and supplies of cattle remain large. Given a larger 2015 calf crop and expectations of increases in the 2016 calf crop, placements of cattle in feedlots in 2016 and early 2017 are expected to be higher, according to USDA’s latest Livestock, Dairy and Poultry Outlook report.

With larger fed cattle supplies and higher carcass weights, beef production for 2017 is forecast at 25.8 billion pounds — 4 percent above 2016. Prices in 2017 are expected to average $118 to $128 per hundredweight. Meanwhile, exports in 2017 are expected to strengthen for most major trading partners.

Outlook improves on good weather
The April Cattle-On-Feed report showed year-over-year increases in both the number of heifers on feed in 1,000-head-plus feedlots (up 4 percent from April 1, 2015) and the heifer share of total steers and heifers on feed on April 1 (up from 31 percent on April 1, 2015, to 32.2 percent on April 1, 2016). The increase in the percentage of heifers on feed may point toward a potential slowdown in heifer retention for rebuilding the cow herd, implying a slower pace of herd rebuilding than previously anticipated. To the extent producers hold back fewer heifers than earlier expected, more heifers may be available for placement on feed.

Third- and fourth-quarter 2016 beef production forecasts were raised on expectations of higher steer and heifer slaughter, partially the result of larger calf crops in 2014 and 2015 and a more normal marketing pace during the last half of the year. The annual 2016 beef production forecast is 24.8 billion pounds, up 5 percent from 2016. Higher beef production will likely carry over into 2017 as expansion continues and more cattle are slaughtered at heavier weights. Annual beef production in 2017 is forecast 4 percent higher year over year at 25.8 billion pounds.

Beef exports to expand by end of 2016
U.S. beef exports for the first quarter of 2016 totaled 534 million pounds, 2 percent higher than a year ago. Increased domestic U.S. beef availability for export, lower prices, and a weakening U.S. dollar have all contributed to renewed buying interest in U.S. beef globally.

Despite lower first-quarter exports to Canada (-9 percent) and Mexico (-11), first-quarter exports to Japan (+6 percent), Korea (+17 percent), Taiwan (+20 percent) and Hong Kong (+10 percent) were noticeably higher, and it is expected that U.S. beef will remain in strong demand globally given the attractive prices and decreased competition from Australian beef exports.

U.S. beef exports for 2016 are expected to total 2.5 billion pounds, about a 9 percent increase year over year. Beef exports in 2017 are expected to strengthen as domestic beef production continues to expand and beef prices decline further, increasing exports nearly 5 percent to 2.6 billion pounds.

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