Moore on Cattle

Moore5834Penn State professor emeritus Lou Moore was recognized for 40-plus years of doing the cattle outlook at Lancaster Cattle Feeders Day in January. While he forecasts corn will remain plentiful and cheap for livestock feeders through 2015, fat cattle prices will be pressured a bit by the cheapening prices for poultry and pork. It won’t be easy to make money this year given the cost of feeder cattle in relation to fats, but it’s doable as feed costs are down and the price feed ratio for livestock is improving.

Moore expects fed cattle to average above $150/ cwt for the next 18 months.

He said the trade expects a 40 to 45 day carryover when next season’s harvest begins and noted the negative returns on corn showed losses of $100/A on land rents. “Land prices are falling, but that’s peculiar to your situation and neighbors,” he said.

The U.S. imported 1.2 million head of feeder cattle from Canada and Mexico in 2014, and while the recent Cattle and Calf Inventory shows some herd rebuilding is underway, Moore says the cattle herd will expand more slowly than competing meats. Thus, the demand for lean beef via imports will continue if dairy and beef producers hold onto their cows.

Moore sees a continued trend toward consumers eating more chicken and pork, but noted that at $6/lb retail average for 2014, beef consumption in 2014 slipped by 4 pounds to 52 pounds per person, compared with annual chicken consumption at 85 pounds per person in 2014.

The U.S. dollar is strengthening, which is having an impact on meat exports, but the value of exports has not changed much even if the quantity is down. The Russian sanctions have dropped U.S. meat exports there to zero, and Moore noted that will hurt the Russian consumers because “it’s unbelievable how inefficient their farms are. They import over half of their food, but not from us now.”

Meanwhile in China, Moore notes that over 40% of the arable land suffers from degradation and reduced capacity to produce food. He noted China is getting interested in beef imports and Vietnam may soon surpass China in pork imports.