Murphy sees optimism in the future of the cattle industry
Dramatic growth in the cowherd this year has resulted in some market fluctuation, and CattleFax’s Mike Murphy said the cattle cycle has returned.
“We had really short supply driven by drought but also the protein supply shortages with pork and poultry,” he said. “All three grew significantly in the last 24 months. Now our market’s corrected, and we know where we can go from here.”
Murphy added that, looking into 2017-18 and even 2019, cow/calf producers will have a better idea about what they have to look forward to.
“It’s going to be a tough two or three years, but it’s going to get better,” Murphy added, commenting that January 2016 saw nearly 1 million more beef cows than the year prior.
He also expects another 800,000 to 1 million more cattle on Jan. 1.
“We’ve got to keep in mind that we’re going to get more global access,” Murphy continued. “China made an announcement that they’re going to look to open to beef some time soon, so things are better longer-term from a cow/calf perspective.”
Murphy added, “Don’t panic about this depressed calf market today. Just recognize that better things are going to come to us. We have to manage our business accordingly in the next few years.”
One way to manage in the meantime is seeking added value through developing their calf crop.
For example, average calves that don’t have branded affiliation, vaccination programs or other affiliated programs are becoming more of a “discount market” product, said Murphy, who noted that they might see a $15 to $18 discount per hundredweight for calves that are in a vaccination or health program or that have a brand alliance.
“There’s a huge differentiation price-wise and value-wise for the buyer,” Murphy explained. “That’s why the differentiation is there.”
CattleFax predicts that fed cattle will range between $90 and $120 per hundredweight, and calves will sell for $105 to $150 on average over the next several years.
Saige Albert, managing editor of the Wyoming Livestock Roundup, wrote this article from a segment of Angus VNR, which is provided by Certified Angus Beef, LLC and the American Angus Association. Learn more at cabpartners.com or angus.org.