Peel Looks Back At 2014 Record Cattle Market

The cattle market has been hot market in 2014. The year started at record levels and have gone up from there. Oklahoma State University Extension Livestock Marketing Specialist Dr. Derrell Peel said the cattle market will also end the year at record levels in terms of prices.

"So, it's been a substantial increase in prices this year," Peel said. "The big driver of course is the supply side. Beef production is down about six percent so far this year. Slaughter is down over seven percent, so those tight supplies are really coming to bear in this market and will continue into 2015."

Cattle numbers and in turn beef supplies will continue to be tight for the upcoming year. Peel said cattle numbers remain down in a longterm sense and there isn't much that can be done in short run. While herd rebuilding began in 2014 but he said it will take a couple of years before progress shows up in terms of increased beef production. As ranchers hold back heifers, this squeezes supplies even tighter and prices continue to move higher.

In the short run the only thing producers can do is increase carcass weights and right now the market is saying it will pay for more pounds creating an opportunity for feedlots and packers to get more pounds out of each animal that is processed. Peel said right now steer and heifer carcass weights are at record levels. That creates very large cuts of meat, which in some cases runs counter to what consumers prefer today. Peel is cautious about producers pushing weights to much as that could create some demand problems.

The beef industry often debates how big is too big in terms of carcass size and weight. With carcass weights getting heavier there is a quality vs. quantity trade off. Peel said there is an incentive for cattlemen to feed cattle to heavier weights but there are limits as to how far producers can push those increases in terms of quality grading as well as having larger carcasses, which can result in discounts from packers. He said at the farm level quantity is the short run view, but over the longer term the industry may see some quality implications.

In looking at the global outlook, record US cattle and beef prices are impacting US beef exports. Peel said levels are being moderated, although the year will finish close to 2013 levels. Looking ahead Peel anticipate a slight decrease in export levels in 2015.