Cattle Profit Margins Expected To Shift During 2019

February 1, 2019

CattleFax Vice President of Industry Relations Kevin Good told those attending last week’s Cattle Industry Convention in New Orleans, LA, the cattle industry has been on “one heck of a good run” for a few years and he expects that to continue into 2019. During the CattleFax Outlook Session, he said cattle prices will remain strong, supported by strong beef demand and a robust economy.

Good tempered his optimism with expectations for margins to compress and leverage to shift from the cow-calf and stocker sectors to feeders as cattle supplies continue to expand. He said there is price risk over the next few years in response to recent cowherd expansion, which is expected to be complete within one to two years.

CattleFax projected fed cattle prices will be steady during 2019, averaging $117/cwt., with market resistance at $130/cwt. and downside risk to $100/cwt. Larger supplies of cattle outside feedyards, coupled with limited profitability in the feeding sector, are expected to put feeder cattle in a range from $130 to $160/cwt. CattleFax expects the calf market to be under pressure, although Good said values in the spring have the potential to reach the mid-$180s/cwt. He suggested a larger calf crop and softer demand potentially could erode prices to the $140/cwt. level this fall.

Chief Executive Officer Randy Blach closed the session by saying the U.S. beef industry must have access to international markets if the run of profitability seen in recent years is to continue.