Cattle Market Economist Derrell Peel Looks into His Crystal Ball for What Lies Ahead in 2018 MarketsFri, 08 Dec 2017 10:08:38 CST
The latter days of 2016 set up cattle producers for a decently profitable, yet somewhat surprising, year in 2017. Most notably, the industry saw more and more cattle pulled ahead and placed on showlists a bit quicker than normal. Additionally, carcass weights came down some and as a result, overall tonnage of beef supplies were not as big as the increasing numbers might have suggested. This allowed most all segments in the beef business to make some money. As we wrap up this year, Radio Oklahoma Ag Network Farm Director Ron Hays reached out to market watcher Derrell Peel for his perspective on what the future may hold for the cattle market as we head into 2018.
"I think there's a couple of things," he said. "I think there's some threats out there. One of which, of course, is that we're just going to continue to see increased beef production and we're going to continue to see increased total meat supplies."
And that includes increased pork and poultry supplies as well, Peel says. As supplies grow, so too will the pressure on the market. However, if demand both domestically and internationally hold up as well as they have over the last it is possible that demand will offset some of that pressure. While at the moment Peel sees no definite reasons as to why demand would falter, he says there is some uncertainty surrounding trade, given the ongoing negotiations and tariff restrictions our country is currently faced with. Peel admits that uncertainty does add to the downside risk producers may be looking at for 2018. Additionally, it is expected that the mama cow herd continues to expand some. More cows mean more calves which means more beef in the pipeline. But Peel points to 2017, during which a similar scenario played out and markets remained strong. Peel says that could absolutely be a possibility, too, and just as surprising as it was to witness this past year.
"I think we generally do expect some weakness in cattle prices in 2018, but probably relatively modest decreases unless we see some change in demand," Peel concluded. "Still, there is some profit potential in 2018 but also some threats to the downside and some reason for producers to manage that downside risk."
Listen to Peel and Hays discuss the possible threats to producers' profit potential during 2018, on today's Beef Buzz.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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