Colorado cattle industry slowly rebounding after years of declining prices
Cattle prices have incrementally plunged in the last three months down to about $97.59 per hundred weight in early-October, slowly climbing past $100 so far through November.
Cattle prices reached record highs a few years ago, but since then, they have exponentially declined. Low prices favored retailers, consumers and meat-packers, but harmed others — especially cattle feeders — leaving them with almost no profits.
After months of waiting and anticipating a final low in these prices, insiders in the cattle industry say they might have finally hit that low.
Cattle prices recently started turning around, steadily and only by a few cents each week, but those who work in the industry are starting to feel a little more optimistic.
“We’re going to slowly grind our way higher,” said Bill Hammerich, CEO of the Colorado Livestock Association. “I don’t think by any means we’ll go back to the historic highs we saw previously, but because of weather conditions, cattle are performing extremely well. So we’re still bringing a lot of tonnage to the market from the beef standpoint.”
Steve Kay, publisher of Cattle Buyer’s weekly, which analyzes the cattle industry, also said live cattle prices are just beginning to rebound after “falling to a level lower than anyone thought they would.”
In 2014, cattle averaged $154.56 per hundredweight. In October of this year, those prices finally bottomed out at about $97.59. Kay said this is frustrating for those in the industry because the hope was prices would have rebounded to about $120 by this time. After a long wait and a big hit, cattle feeders might finally start breaking even.
“Cattle feeders have done a magnificent job in the face of huge losses to just keep marketing cattle in the hope that, eventually, the supplies of cattle will tighten enough that the prices will rebound,” he said. “The packers will simply have to pay more for cattle, and that’s what has started happening.”
Weld County contributes almost 20 percent of the state’s cattle inventory, and Colorado is the fifth largest cattle feeding state in the county.
According to annual surveys from the National Agricultural Statistics Service, cattle production values in the state are high, topping out at $2.47 billion last year, up 3 percent from the year before.
But the industry cycles enormously. Kay said consumers and retailers are benefiting from these low markets, finding meat they enjoy at a cheaper price than it has been in the past. According to Futures File, cheap boneless beef is catching consumers’ eyes, and retailers are moving that inventory at an increasing pace.
But producers, cattle feeders and ranchers haven’t been feeling that same love.
Now, though, they might start to.
“We’re in a situation now where the retailer and the packer have the leverage in this market because of supplies,” Hammerich said. “Until the beef industry figures out how to get back some of that leverage the other two entities have, it’s going to be a struggle to move prices appreciably higher. It’ll probably be in smaller increments.”
He said this provides a stabilizing effect for those in the industry — something they haven’t had in the past few years.
“It gives you some confidence that you can hold on to what you got, and maybe in the future add to that,” Hammerich said.
But cattle prices are still extremely low, and those record highs a few years ago aren’t anywhere in the foreseeable future.
Hammerich has been in the industry since the 1970s, and he said he’s hopeful it has seen its worst days. To him, things can only go up from here.
“I know that all of agriculture today — whether it’s the crop side of things, beef, dairy — everybody is struggling,” he said. “But look at the livestock markets, or look at the grain markets.
“We appear to have established a low, and somewhere in this range now, we’re going to stabilize things as we move forward.” ❖
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