Unknowable Events Could Impact Future Cattle Prices
By Jeff Rose
A Purdue University-CME Ag Economy Barometer survey recently reported producers are very concerned about their farm’s 2022 performance because of escalating production costs. Namely, input prices.
Most don’t believe now is the time to buy equipment or make big investments in their operations.
Nearly six in ten farmers in the study said they expect their costs will increase by 30 percent or more compared to 2021.
In cattle markets, we are watching pasture and range conditions that could mean lighter weight placements in feedlots. We have certainly seen an increase in the number of beef cows moving to slaughter too.
It is possible there will be a much lower calf crop coming from July to December.
So, there could be downward price pressure for the rest of the year because of these factors and others, but higher prices going into next year.
Of course, beef demand is always a factor in our market predictions, as much higher costs of living continue to add pressure to customers in grocery stores and restaurants. Gas prices continue to soar, and we just have no way of predicting how or when consumers will say enough is enough and begin cutting back.
Meanwhile, the Cattle Price Discovery and Transparency Act legislation is unknowable as a factor in market planning. Changes in Livestock Mandatory Reporting and the establishment of a cattle contract library could be of benefit to price discovery.
Of course, when the government gets involved, there may be unintended consequences that could negatively impact the industry.
But again, we just don’t know until the bill makes it into law. So, what is a producer to do?
Use our risk management tools and secure prices at a level that you can pencil out to be a profit.